Correlation Between Premium Brands and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Premium Brands and Gildan Activewear 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 Premium Brands and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Brands Holdings and Gildan Activewear, you can compare the effects of market volatilities on Premium Brands and Gildan Activewear 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 Premium Brands with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Brands and Gildan Activewear.
Diversification Opportunities for Premium Brands and Gildan Activewear
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premium and Gildan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Premium Brands Holdings and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Premium Brands 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 Premium Brands Holdings are associated (or correlated) with Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Premium Brands i.e., Premium Brands and Gildan Activewear go up and down completely randomly.
Pair Corralation between Premium Brands and Gildan Activewear
Assuming the 90 days trading horizon Premium Brands is expected to generate 16.54 times less return on investment than Gildan Activewear. But when comparing it to its historical volatility, Premium Brands Holdings is 1.4 times less risky than Gildan Activewear. It trades about 0.01 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,772 in Gildan Activewear on August 30, 2024 and sell it today you would earn a total of 3,180 from holding Gildan Activewear or generate 84.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Brands Holdings vs. Gildan Activewear
Performance |
| Timeline |
| Premium Brands Holdings |
| Gildan Activewear |
Premium Brands and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Brands and Gildan Activewear
The main advantage of trading using opposite Premium Brands and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Brands position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.| Premium Brands vs. CCL Industries | Premium Brands vs. North West | Premium Brands vs. Maple Leaf Foods | Premium Brands vs. FirstService Corp |
| Gildan Activewear vs. Saputo Inc | Gildan Activewear vs. CCL Industries | Gildan Activewear vs. Thomson Reuters Corp | Gildan Activewear vs. George Weston Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |