Correlation Between Guess and Reitmans

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

By analyzing existing cross correlation between Guess Inc and Reitmans Limited, you can compare the effects of market volatilities on Guess and Reitmans 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 Guess with a short position of Reitmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guess and Reitmans.

Diversification Opportunities for Guess and Reitmans

0.22

Correlation Coefficient

Guess  Reitmans

Modest diversification

The 3 months correlation between Guess and Reitmans is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited and Guess 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 Guess Inc are associated (or correlated) with Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Guess i.e., Guess and Reitmans go up and down completely randomly.

Pair Corralation between Guess and Reitmans

Considering the 90-day investment horizon Guess Inc is expected to under-perform the Reitmans. But the stock apears to be less risky and, when comparing its historical volatility, Guess Inc is 1.02 times less risky than Reitmans. The stock trades about 0.0 of its potential returns per unit of risk. The Reitmans Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  198.00  in Reitmans Limited on September 26, 2024 and sell it today you would earn a total of  2.00  from holding Reitmans Limited or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Guess Inc  vs.  Reitmans Limited

Guess Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guess Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Reitmans is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guess and Reitmans

The main advantage of trading using opposite Guess and Reitmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guess position performs unexpectedly, Reitmans 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 Reitmans will offset losses from the drop in Reitmans' long position.

The idea behind Guess Inc and Reitmans Limited 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.