Correlation Between Gildan Activewear and Boralex

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

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

Diversification Opportunities for Gildan Activewear and Boralex

-0.48

Correlation Coefficient

Gildan Activewear  Boralex

Very good diversification

The 3 months correlation between Gildan and Boralex is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex and Gildan Activewear 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 Gildan Activewear are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Boralex go up and down completely randomly.

Pair Corralation between Gildan Activewear and Boralex

Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.58 times more return on investment than Boralex. However, Gildan Activewear is 1.72 times less risky than Boralex. It trades about 0.15 of its potential returns per unit of risk. Boralex is currently generating about 0.0 per unit of risk. If you would invest  7,042  in Gildan Activewear on December 1, 2024 and sell it today you would earn a total of  773.00  from holding Gildan Activewear or generate 10.98% return on investment over 90 days.

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

Gildan Activewear  vs.  Boralex

Gildan Activewear

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Gildan Activewear may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Boralex

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gildan Activewear and Boralex

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

The idea behind Gildan Activewear and Boralex 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.