Correlation Between Cogeco and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Cogeco 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 Cogeco and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Inc and Gildan Activewear, you can compare the effects of market volatilities on Cogeco 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 Cogeco with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco and Gildan Activewear.
Diversification Opportunities for Cogeco and Gildan Activewear
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cogeco and Gildan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Inc and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Cogeco 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 Cogeco Inc 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 Cogeco i.e., Cogeco and Gildan Activewear go up and down completely randomly.
Pair Corralation between Cogeco and Gildan Activewear
Assuming the 90 days trading horizon Cogeco is expected to generate 18.92 times less return on investment than Gildan Activewear. But when comparing it to its historical volatility, Cogeco Inc is 1.08 times less risky than Gildan Activewear. It trades about 0.01 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,746 in Gildan Activewear on November 2, 2024 and sell it today you would earn a total of 3,841 from holding Gildan Activewear or generate 102.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cogeco Inc vs. Gildan Activewear
Performance |
| Timeline |
| Cogeco Inc |
| Gildan Activewear |
Cogeco and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco and Gildan Activewear
The main advantage of trading using opposite Cogeco and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco 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.| Cogeco vs. Cogeco Communications | Cogeco vs. Quebecor | Cogeco vs. Transcontinental | Cogeco vs. Stella Jones |
| Gildan Activewear vs. Saputo Inc | Gildan Activewear vs. CCL Industries | Gildan Activewear vs. Thomson Reuters Corp | Gildan Activewear vs. George Weston Limited |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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