Correlation Between Gildan Activewear and Ermenegildo Zegna
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Ermenegildo Zegna 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 Ermenegildo Zegna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and Ermenegildo Zegna NV, you can compare the effects of market volatilities on Gildan Activewear and Ermenegildo Zegna 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 Ermenegildo Zegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Ermenegildo Zegna.
Diversification Opportunities for Gildan Activewear and Ermenegildo Zegna
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gildan and Ermenegildo is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Ermenegildo Zegna NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ermenegildo Zegna 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 Ermenegildo Zegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ermenegildo Zegna has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Ermenegildo Zegna go up and down completely randomly.
Pair Corralation between Gildan Activewear and Ermenegildo Zegna
Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.75 times more return on investment than Ermenegildo Zegna. However, Gildan Activewear is 1.34 times less risky than Ermenegildo Zegna. It trades about 0.07 of its potential returns per unit of risk. Ermenegildo Zegna NV is currently generating about -0.02 per unit of risk. If you would invest 2,781 in Gildan Activewear on August 24, 2024 and sell it today you would earn a total of 2,202 from holding Gildan Activewear or generate 79.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. Ermenegildo Zegna NV
Performance |
| Timeline |
| Gildan Activewear |
| Ermenegildo Zegna |
Gildan Activewear and Ermenegildo Zegna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and Ermenegildo Zegna
The main advantage of trading using opposite Gildan Activewear and Ermenegildo Zegna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, Ermenegildo Zegna 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 Ermenegildo Zegna will offset losses from the drop in Ermenegildo Zegna's 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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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