Correlation Between Gildan Activewear and Kinaxis
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Kinaxis 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 Kinaxis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Kinaxis, you can compare the effects of market volatilities on Gildan Activewear and Kinaxis 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 Kinaxis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Kinaxis.
Diversification Opportunities for Gildan Activewear and Kinaxis
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gildan and Kinaxis is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Kinaxis go up and down completely randomly.
Pair Corralation between Gildan Activewear and Kinaxis
Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.86 times more return on investment than Kinaxis. However, Gildan Activewear is 1.17 times less risky than Kinaxis. It trades about 0.08 of its potential returns per unit of risk. Kinaxis is currently generating about 0.03 per unit of risk. If you would invest 3,772 in Gildan Activewear on August 30, 2024 and sell it today you would earn a total of 3,180 from holding Gildan Activewear or generate 84.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. Kinaxis
Performance |
| Timeline |
| Gildan Activewear |
| Kinaxis |
Gildan Activewear and Kinaxis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and Kinaxis
The main advantage of trading using opposite Gildan Activewear and Kinaxis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Kinaxis 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 Kinaxis will offset losses from the drop in Kinaxis' long position.| Gildan Activewear vs. Saputo Inc | Gildan Activewear vs. CCL Industries | Gildan Activewear vs. Thomson Reuters Corp | Gildan Activewear vs. George Weston Limited |
| Kinaxis vs. Open Text Corp | Kinaxis vs. Enghouse Systems | Kinaxis vs. Docebo Inc | Kinaxis vs. Descartes Systems Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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