Correlation Between Gildan Activewear and Citi Trends

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

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

Diversification Opportunities for Gildan Activewear and Citi Trends

-0.12

Correlation Coefficient

Gildan Activewear  Citi Trends

Good diversification

The 3 months correlation between Gildan and Citi is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends 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 Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Citi Trends go up and down completely randomly.

Pair Corralation between Gildan Activewear and Citi Trends

Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.6 times more return on investment than Citi Trends. However, Gildan Activewear is 1.67 times less risky than Citi Trends. It trades about 0.1 of its potential returns per unit of risk. Citi Trends is currently generating about 0.03 per unit of risk. If you would invest  2,881  in Gildan Activewear on October 5, 2024 and sell it today you would earn a total of  1,810  from holding Gildan Activewear or generate 62.83% return on investment over 90 days.

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

Gildan Activewear  vs.  Citi Trends

Gildan Activewear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gildan Activewear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Gildan Activewear is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Citi Trends

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Citi Trends displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gildan Activewear and Citi Trends

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

The idea behind Gildan Activewear and Citi Trends 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..