Correlation Between George Weston and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both George Weston 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 George Weston and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between George Weston Limited and Gildan Activewear, you can compare the effects of market volatilities on George Weston 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 George Weston with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Weston and Gildan Activewear.
Diversification Opportunities for George Weston and Gildan Activewear
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between George and Gildan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and George Weston 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 George Weston Limited 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 George Weston i.e., George Weston and Gildan Activewear go up and down completely randomly.
Pair Corralation between George Weston and Gildan Activewear
Assuming the 90 days horizon George Weston is expected to generate 10.0 times less return on investment than Gildan Activewear. In addition to that, George Weston is 1.59 times more volatile than Gildan Activewear. It trades about 0.02 of its total potential returns per unit of risk. Gildan Activewear is currently generating about 0.24 per unit of volatility. If you would invest 6,653 in Gildan Activewear on August 26, 2024 and sell it today you would earn a total of 310.00 from holding Gildan Activewear or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
George Weston Limited vs. Gildan Activewear
Performance |
| Timeline |
| George Weston Limited |
| Gildan Activewear |
George Weston and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with George Weston and Gildan Activewear
The main advantage of trading using opposite George Weston and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if George Weston 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.| George Weston vs. Loblaw Companies Limited | George Weston vs. Saputo Inc | George Weston vs. Thomson Reuters Corp | George Weston vs. Metro Inc |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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