Correlation Between Life Insurance and Canadian Tire
Can any of the company-specific risk be diversified away by investing in both Life Insurance and Canadian Tire at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Life Insurance and Canadian Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Insurance and Canadian Tire, you can compare the effects of market volatilities on Life Insurance and Canadian Tire and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Life Insurance with a short position of Canadian Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Canadian Tire.
Diversification Opportunities for Life Insurance and Canadian Tire
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Life and Canadian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Canadian Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Tire and Life Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Life Insurance are associated (or correlated) with Canadian Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Tire has no effect on the direction of Life Insurance i.e., Life Insurance and Canadian Tire go up and down completely randomly.
Pair Corralation between Life Insurance and Canadian Tire
Assuming the 90 days horizon Life Insurance is expected to generate 0.9 times more return on investment than Canadian Tire. However, Life Insurance is 1.11 times less risky than Canadian Tire. It trades about 0.07 of its potential returns per unit of risk. Canadian Tire is currently generating about 0.01 per unit of risk. If you would invest 905.00 in Life Insurance on September 11, 2025 and sell it today you would earn a total of 95.00 from holding Life Insurance or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Insurance vs. Canadian Tire
Performance |
| Timeline |
| Life Insurance |
| Canadian Tire |
Life Insurance and Canadian Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Insurance and Canadian Tire
The main advantage of trading using opposite Life Insurance and Canadian Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, Canadian Tire can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canadian Tire will offset losses from the drop in Canadian Tire's long position.| Life Insurance vs. Flywheel Advanced Technology | Life Insurance vs. Impac Mortgage Holdings | Life Insurance vs. Strategic Management and | Life Insurance vs. SOL Global Investments |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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