Correlation Between Gildan Activewear and VF
Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and VF 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 VF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gildan Activewear and VF Corporation, you can compare the effects of market volatilities on Gildan Activewear and VF 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 VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and VF.
Diversification Opportunities for Gildan Activewear and VF
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gildan and VF is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and VF go up and down completely randomly.
Pair Corralation between Gildan Activewear and VF
Assuming the 90 days horizon Gildan Activewear is expected to generate 1.2 times less return on investment than VF. But when comparing it to its historical volatility, Gildan Activewear is 5.41 times less risky than VF. It trades about 0.38 of its potential returns per unit of risk. VF Corporation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,606 in VF Corporation on August 25, 2024 and sell it today you would earn a total of 132.00 from holding VF Corporation or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gildan Activewear vs. VF Corp.
Performance |
| Timeline |
| Gildan Activewear |
| VF Corporation |
Gildan Activewear and VF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gildan Activewear and VF
The main advantage of trading using opposite Gildan Activewear and VF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear position performs unexpectedly, VF 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 VF will offset losses from the drop in VF's long position.| Gildan Activewear vs. United Insurance Holdings | Gildan Activewear vs. Universal Insurance Holdings | Gildan Activewear vs. Japan Post Insurance | Gildan Activewear vs. LIFENET INSURANCE CO |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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