Correlation Between Cardiol Therapeutics and Gildan Activewear

Can any of the company-specific risk be diversified away by investing in both Cardiol Therapeutics 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 Cardiol Therapeutics and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardiol Therapeutics Class and Gildan Activewear, you can compare the effects of market volatilities on Cardiol Therapeutics 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 Cardiol Therapeutics with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardiol Therapeutics and Gildan Activewear.

Diversification Opportunities for Cardiol Therapeutics and Gildan Activewear

-0.08

Correlation Coefficient

Cardiol Therapeutics  Gildan Activewear

Good diversification

The 3 months correlation between Cardiol and Gildan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cardiol Therapeutics Class and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Cardiol Therapeutics 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 Cardiol Therapeutics Class 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 Cardiol Therapeutics i.e., Cardiol Therapeutics and Gildan Activewear go up and down completely randomly.

Pair Corralation between Cardiol Therapeutics and Gildan Activewear

Assuming the 90 days trading horizon Cardiol Therapeutics Class is expected to under-perform the Gildan Activewear. In addition to that, Cardiol Therapeutics is 2.99 times more volatile than Gildan Activewear. It trades about -0.01 of its total potential returns per unit of risk. Gildan Activewear is currently generating about -0.03 per unit of volatility. If you would invest  6,680  in Gildan Activewear on December 21, 2024 and sell it today you would lose (207.00) from holding Gildan Activewear or give up 3.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cardiol Therapeutics Class  vs.  Gildan Activewear

Cardiol Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardiol Therapeutics Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cardiol Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gildan Activewear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gildan Activewear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Gildan Activewear is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cardiol Therapeutics and Gildan Activewear

The main advantage of trading using opposite Cardiol Therapeutics and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardiol Therapeutics 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.

The idea behind Cardiol Therapeutics Class and Gildan Activewear pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.