Correlation Between Gildan Activewear and Canfor
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Canfor 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 Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Canfor, you can compare the effects of market volatilities on Gildan Activewear and Canfor 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 Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Canfor.
Diversification Opportunities for Gildan Activewear and Canfor
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gildan and Canfor is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Canfor go up and down completely randomly.
Pair Corralation between Gildan Activewear and Canfor
Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.98 times more return on investment than Canfor. However, Gildan Activewear is 1.02 times less risky than Canfor. It trades about -0.01 of its potential returns per unit of risk. Canfor is currently generating about -0.03 per unit of risk. If you would invest 7,380 in Gildan Activewear on December 6, 2024 and sell it today you would lose (59.00) from holding Gildan Activewear or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. Canfor
Performance |
| Timeline |
| Gildan Activewear |
| Canfor |
Gildan Activewear and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and Canfor
The main advantage of trading using opposite Gildan Activewear and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Canfor 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 Canfor will offset losses from the drop in Canfor's long position.| Gildan Activewear vs. Saputo Inc | Gildan Activewear vs. CCL Industries | Gildan Activewear vs. Thomson Reuters Corp | Gildan Activewear vs. George Weston Limited |
| Canfor vs. Western Investment | Canfor vs. Maple Peak Investments | Canfor vs. Diversified Royalty Corp | Canfor vs. Rogers Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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