Correlation Between Gildan Activewear and Landsea Homes
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Landsea Homes 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 Landsea Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Landsea Homes, you can compare the effects of market volatilities on Gildan Activewear and Landsea Homes 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 Landsea Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Landsea Homes.
Diversification Opportunities for Gildan Activewear and Landsea Homes
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gildan and Landsea is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Landsea Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes 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 Landsea Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landsea Homes has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Landsea Homes go up and down completely randomly.
Pair Corralation between Gildan Activewear and Landsea Homes
Considering the 90-day investment horizon Gildan Activewear is expected to generate 2.19 times less return on investment than Landsea Homes. But when comparing it to its historical volatility, Gildan Activewear is 8.93 times less risky than Landsea Homes. It trades about 0.23 of its potential returns per unit of risk. Landsea Homes is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Landsea Homes on August 28, 2024 and sell it today you would earn a total of 3.00 from holding Landsea Homes or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. Landsea Homes
Performance |
| Timeline |
| Gildan Activewear |
| Landsea Homes |
Gildan Activewear and Landsea Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and Landsea Homes
The main advantage of trading using opposite Gildan Activewear and Landsea Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Landsea Homes 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 Landsea Homes will offset losses from the drop in Landsea Homes' long position.| Gildan Activewear vs. Vince Holding Corp | Gildan Activewear vs. Ermenegildo Zegna NV | Gildan Activewear vs. Columbia Sportswear | Gildan Activewear vs. G III Apparel 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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