Correlation Between Vista Outdoor and Canada Goose

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Can any of the company-specific risk be diversified away by investing in both Vista Outdoor and Canada Goose 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 Vista Outdoor and Canada Goose into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vista Outdoor and Canada Goose Holdings, you can compare the effects of market volatilities on Vista Outdoor and Canada Goose 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 Vista Outdoor with a short position of Canada Goose. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Outdoor and Canada Goose.

Diversification Opportunities for Vista Outdoor and Canada Goose

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Vista and Canada is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vista Outdoor and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings and Vista Outdoor 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 Vista Outdoor are associated (or correlated) with Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Vista Outdoor i.e., Vista Outdoor and Canada Goose go up and down completely randomly.

Pair Corralation between Vista Outdoor and Canada Goose

Given the investment horizon of 90 days Vista Outdoor is expected to generate 0.73 times more return on investment than Canada Goose. However, Vista Outdoor is 1.37 times less risky than Canada Goose. It trades about 0.16 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about -0.17 per unit of risk. If you would invest  3,080  in Vista Outdoor on December 30, 2023 and sell it today you would earn a total of  198.00  from holding Vista Outdoor or generate 6.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Vista Outdoor  vs.  Canada Goose Holdings

 Performance 
       Timeline  
Vista Outdoor 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vista Outdoor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Vista Outdoor may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Canada Goose Holdings 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Canada Goose Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Canada Goose may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Vista Outdoor and Canada Goose Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vista Outdoor and Canada Goose

The main advantage of trading using opposite Vista Outdoor and Canada Goose positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Outdoor position performs unexpectedly, Canada Goose 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 Canada Goose will offset losses from the drop in Canada Goose's long position.
The idea behind Vista Outdoor and Canada Goose Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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