Correlation Between Goeasy and Aritzia

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

By analyzing existing cross correlation between goeasy and Aritzia, you can compare the effects of market volatilities on Goeasy and Aritzia 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 Goeasy with a short position of Aritzia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goeasy and Aritzia.

Diversification Opportunities for Goeasy and Aritzia

0.77

Correlation Coefficient

Goeasy  Aritzia

Poor diversification

The 3 months correlation between Goeasy and Aritzia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding goeasy and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and Goeasy 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 goeasy are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Goeasy i.e., Goeasy and Aritzia go up and down completely randomly.

Pair Corralation between Goeasy and Aritzia

Assuming the 90 days trading horizon goeasy is expected to under-perform the Aritzia. But the stock apears to be less risky and, when comparing its historical volatility, goeasy is 1.58 times less risky than Aritzia. The stock trades about -0.04 of its potential returns per unit of risk. The Aritzia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,327  in Aritzia on December 29, 2024 and sell it today you would lose (244.00) from holding Aritzia or give up 4.58% of portfolio value over 90 days.

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

goeasy  vs.  Aritzia

goeasy

Risk-Adjusted Performance

Very Weak

Over the last 90 days goeasy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aritzia

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Goeasy and Aritzia

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

The idea behind goeasy and Aritzia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.