Correlation Between Gildan Activewear and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Aurora Cannabis 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 Gildan Activewear and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Aurora Cannabis, you can compare the effects of market volatilities on Gildan Activewear and Aurora Cannabis 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 Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Aurora Cannabis.
Diversification Opportunities for Gildan Activewear and Aurora Cannabis
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gildan and Aurora is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Gildan Activewear 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 Gildan Activewear are associated (or correlated) with Aurora Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Cannabis has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Gildan Activewear and Aurora Cannabis
Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.28 times more return on investment than Aurora Cannabis. However, Gildan Activewear is 3.61 times less risky than Aurora Cannabis. It trades about 0.15 of its potential returns per unit of risk. Aurora Cannabis is currently generating about -0.12 per unit of risk. If you would invest 6,754 in Gildan Activewear on September 12, 2024 and sell it today you would earn a total of 163.00 from holding Gildan Activewear or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. Aurora Cannabis
Performance |
| Timeline |
| Gildan Activewear |
| Aurora Cannabis |
Gildan Activewear and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and Aurora Cannabis
The main advantage of trading using opposite Gildan Activewear and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Aurora Cannabis 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 Aurora Cannabis will offset losses from the drop in Aurora Cannabis' long position.| Gildan Activewear vs. Apple Inc CDR | Gildan Activewear vs. NVIDIA CDR | Gildan Activewear vs. Microsoft Corp CDR | Gildan Activewear vs. Amazon CDR |
| Aurora Cannabis vs. Canopy Growth Corp | Aurora Cannabis vs. Cronos Group | Aurora Cannabis vs. Air Canada | Aurora Cannabis vs. BlackBerry |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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