Correlation Between Gildan Activewear and Lakeland Industries

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

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

Diversification Opportunities for Gildan Activewear and Lakeland Industries

0.26

Correlation Coefficient

Gildan Activewear  Lakeland Industries

Modest diversification

The 3 months correlation between Gildan and Lakeland is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Lakeland Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Industries 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 Lakeland Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Industries has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Lakeland Industries go up and down completely randomly.

Pair Corralation between Gildan Activewear and Lakeland Industries

Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.5 times more return on investment than Lakeland Industries. However, Gildan Activewear is 2.02 times less risky than Lakeland Industries. It trades about -0.03 of its potential returns per unit of risk. Lakeland Industries is currently generating about -0.1 per unit of risk. If you would invest  4,628  in Gildan Activewear on December 29, 2024 and sell it today you would lose (147.00) from holding Gildan Activewear or give up 3.18% of portfolio value over 90 days.

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

Gildan Activewear  vs.  Lakeland Industries

Gildan Activewear

Risk-Adjusted Performance

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.

Lakeland Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lakeland Industries 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 forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gildan Activewear and Lakeland Industries

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

The idea behind Gildan Activewear and Lakeland Industries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.