Correlation Between Gildan Activewear and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and CCL Industries 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 CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and CCL Industries, you can compare the effects of market volatilities on Gildan Activewear and CCL Industries 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 CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and CCL Industries.
Diversification Opportunities for Gildan Activewear and CCL Industries
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gildan and CCL is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and CCL Industries go up and down completely randomly.
Pair Corralation between Gildan Activewear and CCL Industries
Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.68 times more return on investment than CCL Industries. However, Gildan Activewear is 1.47 times less risky than CCL Industries. It trades about 0.31 of its potential returns per unit of risk. CCL Industries is currently generating about -0.18 per unit of risk. If you would invest 6,472 in Gildan Activewear on August 24, 2024 and sell it today you would earn a total of 441.00 from holding Gildan Activewear or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. CCL Industries
Performance |
| Timeline |
| Gildan Activewear |
| CCL Industries |
Gildan Activewear and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and CCL Industries
The main advantage of trading using opposite Gildan Activewear and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Gildan Activewear vs. Restaurant Brands International | Gildan Activewear vs. Enghouse Systems | Gildan Activewear vs. Metro Inc | Gildan Activewear vs. goeasy |
| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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