Correlation Between Gildan Activewear and Transcontinental
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Transcontinental 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 Transcontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Transcontinental, you can compare the effects of market volatilities on Gildan Activewear and Transcontinental 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 Transcontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Transcontinental.
Diversification Opportunities for Gildan Activewear and Transcontinental
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gildan and Transcontinental is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental 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 Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Transcontinental go up and down completely randomly.
Pair Corralation between Gildan Activewear and Transcontinental
Assuming the 90 days trading horizon Gildan Activewear is expected to generate 1.01 times more return on investment than Transcontinental. However, Gildan Activewear is 1.01 times more volatile than Transcontinental. It trades about 0.32 of its potential returns per unit of risk. Transcontinental is currently generating about -0.13 per unit of risk. If you would invest 6,719 in Gildan Activewear on October 21, 2024 and sell it today you would earn a total of 481.00 from holding Gildan Activewear or generate 7.16% 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. Transcontinental
Performance |
| Timeline |
| Gildan Activewear |
| Transcontinental |
Gildan Activewear and Transcontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and Transcontinental
The main advantage of trading using opposite Gildan Activewear and Transcontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Transcontinental 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 Transcontinental will offset losses from the drop in Transcontinental'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 |
| Transcontinental vs. Cogeco Communications | Transcontinental vs. Quebecor | Transcontinental vs. CCL Industries | Transcontinental vs. Finning International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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