Correlation Between Therma Bright and Canada Goose

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

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

Diversification Opportunities for Therma Bright and Canada Goose

0.62

Correlation Coefficient

Therma Bright  Canada Goose

Poor diversification

The 3 months correlation between Therma and Canada is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright 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 Therma Bright 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 Therma Bright 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 Therma Bright i.e., Therma Bright and Canada Goose go up and down completely randomly.

Pair Corralation between Therma Bright and Canada Goose

Assuming the 90 days trading horizon Therma Bright is expected to generate 11.15 times more return on investment than Canada Goose. However, Therma Bright is 11.15 times more volatile than Canada Goose Holdings. It trades about 0.12 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about 0.25 per unit of risk. If you would invest  2.50  in Therma Bright on September 20, 2024 and sell it today you would earn a total of  0.50  from holding Therma Bright or generate 20.0% return on investment over 90 days.

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

Therma Bright  vs.  Canada Goose Holdings

Therma Bright

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Therma Bright has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 Therma Bright and Canada Goose

The main advantage of trading using opposite Therma Bright and Canada Goose positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright 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 Therma Bright 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.