Correlation Between Gildan Activewear and NISOURCE

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

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

Diversification Opportunities for Gildan Activewear and NISOURCE

-0.11

Correlation Coefficient

Gildan Activewear  NISOURCE

Good diversification

The 3 months correlation between Gildan and NISOURCE is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE INC has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and NISOURCE go up and down completely randomly.

Pair Corralation between Gildan Activewear and NISOURCE

Considering the 90-day investment horizon Gildan Activewear is expected to generate 18.32 times less return on investment than NISOURCE. But when comparing it to its historical volatility, Gildan Activewear is 28.0 times less risky than NISOURCE. It trades about 0.07 of its potential returns per unit of risk. NISOURCE INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,019  in NISOURCE INC on October 23, 2024 and sell it today you would lose (320.00) from holding NISOURCE INC or give up 3.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Gildan Activewear  vs.  NISOURCE INC

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.

NISOURCE INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NISOURCE INC investors.

Pair Trading with Gildan Activewear and NISOURCE

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

The idea behind Gildan Activewear and NISOURCE INC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.