Correlation Between Lakeland Industries and PVH Corp

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

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

Diversification Opportunities for Lakeland Industries and PVH Corp

0.7

Correlation Coefficient

Lakeland Industries  PVH Corp

Poor diversification

The 3 months correlation between Lakeland and PVH is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp and Lakeland Industries 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 Lakeland Industries are associated (or correlated) with PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Lakeland Industries i.e., Lakeland Industries and PVH Corp go up and down completely randomly.

Pair Corralation between Lakeland Industries and PVH Corp

Given the investment horizon of 90 days Lakeland Industries is expected to generate 1.46 times more return on investment than PVH Corp. However, Lakeland Industries is 1.46 times more volatile than PVH Corp. It trades about 0.37 of its potential returns per unit of risk. PVH Corp is currently generating about -0.07 per unit of risk. If you would invest  2,204  in Lakeland Industries on October 8, 2024 and sell it today you would earn a total of  385.00  from holding Lakeland Industries or generate 17.47% return on investment over 90 days.

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

Lakeland Industries  vs.  PVH Corp

Lakeland Industries

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Lakeland Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

PVH Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PVH Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, PVH Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lakeland Industries and PVH Corp

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

The idea behind Lakeland Industries and PVH 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.