Correlation Between Royal Canadian and Canada Goose

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

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

Diversification Opportunities for Royal Canadian and Canada Goose

-0.4

Correlation Coefficient

Royal Canadian  Canada Goose

Very good diversification

The 3 months correlation between Royal and Canada is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Royal Canadian Mint and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings and Royal Canadian 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 Royal Canadian Mint are associated (or correlated) with Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Royal Canadian i.e., Royal Canadian and Canada Goose go up and down completely randomly.

Pair Corralation between Royal Canadian and Canada Goose

Assuming the 90 days trading horizon Royal Canadian is expected to generate 2.14 times less return on investment than Canada Goose. But when comparing it to its historical volatility, Royal Canadian Mint is 1.64 times less risky than Canada Goose. It trades about 0.19 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,324  in Canada Goose Holdings on September 19, 2024 and sell it today you would earn a total of  120.00  from holding Canada Goose Holdings or generate 9.06% return on investment over 90 days.

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

Royal Canadian Mint  vs.  Canada Goose Holdings

Royal Canadian Mint

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Canadian Mint are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Royal Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Royal Canadian and Canada Goose

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

The idea behind Royal Canadian Mint and Canada Goose Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.