Correlation Between Gildan Activewear and DRI Healthcare

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

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

Diversification Opportunities for Gildan Activewear and DRI Healthcare

0.04

Correlation Coefficient

Gildan Activewear  DRI Healthcare

Significant diversification

The 3 months correlation between Gildan and DRI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and DRI Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRI Healthcare Trust 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 DRI Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRI Healthcare Trust has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and DRI Healthcare go up and down completely randomly.

Pair Corralation between Gildan Activewear and DRI Healthcare

Assuming the 90 days trading horizon Gildan Activewear is expected to generate 0.42 times more return on investment than DRI Healthcare. However, Gildan Activewear is 2.4 times less risky than DRI Healthcare. It trades about 0.24 of its potential returns per unit of risk. DRI Healthcare Trust is currently generating about -0.02 per unit of risk. If you would invest  6,049  in Gildan Activewear on September 12, 2024 and sell it today you would earn a total of  868.00  from holding Gildan Activewear or generate 14.35% return on investment over 90 days.

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

Gildan Activewear  vs.  DRI Healthcare Trust

Gildan Activewear

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Gildan Activewear displayed solid returns over the last few months and may actually be approaching a breakup point.

DRI Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DRI Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DRI Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gildan Activewear and DRI Healthcare

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

The idea behind Gildan Activewear and DRI Healthcare Trust 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.