Correlation Between G III and Gildan Activewear

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

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

Diversification Opportunities for G III and Gildan Activewear

-0.61

Correlation Coefficient

G III  Gildan Activewear

Excellent diversification

The 3 months correlation between GIII and Gildan is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and G III 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 G III Apparel Group 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 G III i.e., G III and Gildan Activewear go up and down completely randomly.

Pair Corralation between G III and Gildan Activewear

Given the investment horizon of 90 days G III Apparel Group is expected to under-perform the Gildan Activewear. In addition to that, G III is 1.51 times more volatile than Gildan Activewear. It trades about -0.29 of its total potential returns per unit of risk. Gildan Activewear is currently generating about 0.22 per unit of volatility. If you would invest  5,114  in Gildan Activewear on November 28, 2024 and sell it today you would earn a total of  333.00  from holding Gildan Activewear or generate 6.51% return on investment over 90 days.

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

G III Apparel Group  vs.  Gildan Activewear

G III Apparel

Risk-Adjusted Performance

Very Weak

Over the last 90 days G III Apparel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, G III is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Gildan Activewear

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Gildan Activewear may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with G III and Gildan Activewear

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

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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 Transaction History module to view history of all your transactions and understand their impact on performance.