Correlation Between Charlottes Web and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Charlottes Web 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 Charlottes Web and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charlottes Web Holdings and Gildan Activewear, you can compare the effects of market volatilities on Charlottes Web 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 Charlottes Web with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charlottes Web and Gildan Activewear.
Diversification Opportunities for Charlottes Web and Gildan Activewear
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charlottes and Gildan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Charlottes Web Holdings and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Charlottes Web 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 Charlottes Web 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 Charlottes Web i.e., Charlottes Web and Gildan Activewear go up and down completely randomly.
Pair Corralation between Charlottes Web and Gildan Activewear
Assuming the 90 days trading horizon Charlottes Web Holdings is expected to under-perform the Gildan Activewear. In addition to that, Charlottes Web is 6.3 times more volatile than Gildan Activewear. It trades about -0.15 of its total potential returns per unit of risk. Gildan Activewear is currently generating about 0.12 per unit of volatility. If you would invest 6,796 in Gildan Activewear on September 5, 2024 and sell it today you would earn a total of 147.00 from holding Gildan Activewear or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charlottes Web Holdings vs. Gildan Activewear
Performance |
| Timeline |
| Charlottes Web Holdings |
| Gildan Activewear |
Charlottes Web and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charlottes Web and Gildan Activewear
The main advantage of trading using opposite Charlottes Web and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charlottes Web 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.| Charlottes Web vs. Gildan Activewear | Charlottes Web vs. Open Text Corp | Charlottes Web vs. Waste Connections | Charlottes Web vs. CCL Industries |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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