Correlation Between Gildan Activewear and Falcons Beyond

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

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

Diversification Opportunities for Gildan Activewear and Falcons Beyond

-0.38

Correlation Coefficient

Gildan Activewear  Falcons Beyond

Very good diversification

The 3 months correlation between Gildan and Falcons is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Falcons Beyond go up and down completely randomly.

Pair Corralation between Gildan Activewear and Falcons Beyond

Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.28 times more return on investment than Falcons Beyond. However, Gildan Activewear is 3.59 times less risky than Falcons Beyond. It trades about 0.37 of its potential returns per unit of risk. Falcons Beyond Global, is currently generating about -0.59 per unit of risk. If you would invest  4,683  in Gildan Activewear on October 25, 2024 and sell it today you would earn a total of  404.00  from holding Gildan Activewear or generate 8.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Gildan Activewear  vs.  Falcons Beyond Global,

Gildan Activewear

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 7 (%) 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 February 2025.

Falcons Beyond Global,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcons Beyond Global, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gildan Activewear and Falcons Beyond

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

The idea behind Gildan Activewear and Falcons Beyond Global, 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.