Correlation Between Winpak and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Winpak 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 Winpak and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winpak and Gildan Activewear, you can compare the effects of market volatilities on Winpak 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 Winpak with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winpak and Gildan Activewear.
Diversification Opportunities for Winpak and Gildan Activewear
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Winpak and Gildan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Winpak and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Winpak 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 Winpak 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 Winpak i.e., Winpak and Gildan Activewear go up and down completely randomly.
Pair Corralation between Winpak and Gildan Activewear
Assuming the 90 days trading horizon Winpak is expected to generate 2.43 times less return on investment than Gildan Activewear. But when comparing it to its historical volatility, Winpak is 1.0 times less risky than Gildan Activewear. It trades about 0.07 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,348 in Gildan Activewear on August 28, 2024 and sell it today you would earn a total of 2,642 from holding Gildan Activewear or generate 60.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winpak vs. Gildan Activewear
Performance |
| Timeline |
| Winpak |
| Gildan Activewear |
Winpak and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winpak and Gildan Activewear
The main advantage of trading using opposite Winpak and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winpak 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.| Winpak vs. Globex Mining Enterprises | Winpak vs. Guru Organic Energy | Winpak vs. Aya Gold Silver | Winpak vs. Metalero Mining 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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