Correlation Between Canada Goose and IFabric Corp

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

By analyzing existing cross correlation between Canada Goose Holdings and iFabric Corp, you can compare the effects of market volatilities on Canada Goose and IFabric Corp 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 Canada Goose with a short position of IFabric Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Goose and IFabric Corp.

Diversification Opportunities for Canada Goose and IFabric Corp

-0.48

Correlation Coefficient

Canada Goose  IFabric Corp

Very good diversification

The 3 months correlation between Canada and IFabric is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and iFabric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iFabric Corp and Canada Goose 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 Canada Goose Holdings are associated (or correlated) with IFabric Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iFabric Corp has no effect on the direction of Canada Goose i.e., Canada Goose and IFabric Corp go up and down completely randomly.

Pair Corralation between Canada Goose and IFabric Corp

Assuming the 90 days trading horizon Canada Goose Holdings is expected to generate 0.54 times more return on investment than IFabric Corp. However, Canada Goose Holdings is 1.85 times less risky than IFabric Corp. It trades about 0.2 of its potential returns per unit of risk. iFabric Corp is currently generating about -0.05 per unit of risk. If you would invest  1,359  in Canada Goose Holdings on September 25, 2024 and sell it today you would earn a total of  93.00  from holding Canada Goose Holdings or generate 6.84% return on investment over 90 days.

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

Canada Goose Holdings  vs.  iFabric Corp

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Canada Goose is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iFabric Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iFabric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IFabric Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Canada Goose and IFabric Corp

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

The idea behind Canada Goose Holdings and iFabric Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.