Correlation Between Canada Goose and Gildan Activewear

Can any of the company-specific risk be diversified away by investing in both Canada Goose and Gildan Activewear 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 Canada Goose and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canada Goose Holdings and Gildan Activewear, you can compare the effects of market volatilities on Canada Goose and Gildan Activewear 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 Canada Goose with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Goose and Gildan Activewear.

Diversification Opportunities for Canada Goose and Gildan Activewear

-0.27

Correlation Coefficient

Canada Goose  Gildan Activewear

Very good diversification

The 3 months correlation between Canada and Gildan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Canada Goose 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 Canada Goose Holdings are associated (or correlated) with Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Canada Goose i.e., Canada Goose and Gildan Activewear go up and down completely randomly.

Pair Corralation between Canada Goose and Gildan Activewear

Given the investment horizon of 90 days Canada Goose Holdings is expected to generate 1.86 times more return on investment than Gildan Activewear. However, Canada Goose is 1.86 times more volatile than Gildan Activewear. It trades about 0.08 of its potential returns per unit of risk. Gildan Activewear is currently generating about -0.1 per unit of risk. If you would invest  1,112  in Canada Goose Holdings on January 26, 2024 and sell it today you would earn a total of  38.00  from holding Canada Goose Holdings or generate 3.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canada Goose Holdings  vs.  Gildan Activewear

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canada Goose is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Gildan Activewear

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Gildan Activewear may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Canada Goose and Gildan Activewear

The main advantage of trading using opposite Canada Goose and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Goose position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.

The idea behind Canada Goose Holdings and Gildan Activewear 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.