Correlation Between Gildan Activewear and Rubicon Organics

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Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Rubicon Organics 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 Rubicon Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Rubicon Organics, you can compare the effects of market volatilities on Gildan Activewear and Rubicon Organics 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 Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Rubicon Organics.

Diversification Opportunities for Gildan Activewear and Rubicon Organics

-0.9
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Gildan and Rubicon is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Rubicon Organics go up and down completely randomly.

Pair Corralation between Gildan Activewear and Rubicon Organics

Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.17 times more return on investment than Rubicon Organics. However, Gildan Activewear is 5.94 times less risky than Rubicon Organics. It trades about 0.24 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.0 per unit of risk. If you would invest  5,229  in Gildan Activewear on September 5, 2024 and sell it today you would earn a total of  1,714  from holding Gildan Activewear or generate 32.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Gildan Activewear  vs.  Rubicon Organics

 Performance 
       Timeline  
Gildan Activewear 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Gildan Activewear displayed solid returns over the last few months and may actually be approaching a breakup point.
Rubicon Organics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Gildan Activewear and Rubicon Organics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gildan Activewear and Rubicon Organics

The main advantage of trading using opposite Gildan Activewear and Rubicon Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Rubicon Organics 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 Rubicon Organics will offset losses from the drop in Rubicon Organics' long position.
The idea behind Gildan Activewear and Rubicon Organics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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