diversifiable risk of combining Gildan Activewear and Advent Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Advent Wireless, you can compare the effects of market volatilities on Gildan Activewear and Advent Wireless 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 Gildan Activewear with a short position of Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Advent Wireless.
Diversification Opportunities for Gildan Activewear and Advent Wireless
Pair Corralation between Gildan Activewear and Advent Wireless
Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.87 times more return on investment than Advent Wireless. However, Gildan Activewear is 1.15 times less risky than Advent Wireless. It trades about 0.01 of its potential returns per unit of risk. Advent Wireless is currently generating about 0.0 per unit of risk. If you would invest 4,730 in Gildan Activewear on December 6, 2023 and sell it today you would lose (45.00) from holding Gildan Activewear or give up 0.95% of portfolio value over 90 days.
|3 Months [change]
Gildan Activewear vs. Advent Wireless
Gildan Activewear and Advent Wireless Volatility Contrast
Pair Trading with Gildan Activewear and Advent WirelessThe main advantage of trading using opposite Gildan Activewear and Advent Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Advent Wireless 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 Advent Wireless will offset losses from the drop in Advent Wireless' long position. The idea behind Gildan Activewear and Advent Wireless pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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