Correlation Between Gildan Activewear and Richelieu Hardware
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Richelieu Hardware 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 Richelieu Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Richelieu Hardware, you can compare the effects of market volatilities on Gildan Activewear and Richelieu Hardware 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 Richelieu Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Richelieu Hardware.
Diversification Opportunities for Gildan Activewear and Richelieu Hardware
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gildan and Richelieu is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Richelieu Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richelieu Hardware 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 Richelieu Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richelieu Hardware has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Richelieu Hardware go up and down completely randomly.
Pair Corralation between Gildan Activewear and Richelieu Hardware
Assuming the 90 days trading horizon Gildan Activewear is expected to generate 1.86 times less return on investment than Richelieu Hardware. But when comparing it to its historical volatility, Gildan Activewear is 1.61 times less risky than Richelieu Hardware. It trades about 0.21 of its potential returns per unit of risk. Richelieu Hardware is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,804 in Richelieu Hardware on August 29, 2024 and sell it today you would earn a total of 293.00 from holding Richelieu Hardware or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. Richelieu Hardware
Performance |
| Timeline |
| Gildan Activewear |
| Richelieu Hardware |
Gildan Activewear and Richelieu Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and Richelieu Hardware
The main advantage of trading using opposite Gildan Activewear and Richelieu Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Richelieu Hardware 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 Richelieu Hardware will offset losses from the drop in Richelieu Hardware'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 |
| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
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 CEOs Directory module to screen CEOs from public companies around the world.
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