Correlation Between Gildan Activewear and United Airlines
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and United Airlines 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 United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and United Airlines Holdings, you can compare the effects of market volatilities on Gildan Activewear and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and United Airlines.
Diversification Opportunities for Gildan Activewear and United Airlines
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gildan and United is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and United Airlines go up and down completely randomly.
Pair Corralation between Gildan Activewear and United Airlines
Assuming the 90 days horizon Gildan Activewear is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Gildan Activewear is 2.38 times less risky than United Airlines. The stock trades about -0.03 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 8,200 in United Airlines Holdings on September 12, 2024 and sell it today you would earn a total of 1,330 from holding United Airlines Holdings or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. United Airlines Holdings
Performance |
| Timeline |
| Gildan Activewear |
| United Airlines Holdings |
Gildan Activewear and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and United Airlines
The main advantage of trading using opposite Gildan Activewear and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Gildan Activewear vs. Superior Plus Corp | Gildan Activewear vs. SIVERS SEMICONDUCTORS AB | Gildan Activewear vs. Norsk Hydro ASA | Gildan Activewear vs. Reliance Steel Aluminum |
| United Airlines vs. Zijin Mining Group | United Airlines vs. Highlight Communications AG | United Airlines vs. Grupo Carso SAB | United Airlines vs. GEELY AUTOMOBILE |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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