Correlation Between Gildan Activewear and Levi Strauss

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

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

Diversification Opportunities for Gildan Activewear and Levi Strauss

-0.69

Correlation Coefficient

Gildan Activewear  Levi Strauss

Excellent diversification

The 3 months correlation between Gildan and Levi is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss and Gildan Activewear 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 Gildan Activewear are associated (or correlated) with Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Levi Strauss go up and down completely randomly.

Pair Corralation between Gildan Activewear and Levi Strauss

Assuming the 90 days horizon Gildan Activewear is expected to generate 0.44 times more return on investment than Levi Strauss. However, Gildan Activewear is 2.27 times less risky than Levi Strauss. It trades about 0.18 of its potential returns per unit of risk. Levi Strauss Co is currently generating about -0.07 per unit of risk. If you would invest  3,486  in Gildan Activewear on September 24, 2024 and sell it today you would earn a total of  1,014  from holding Gildan Activewear or generate 29.09% return on investment over 90 days.

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

Gildan Activewear  vs.  Levi Strauss Co

Gildan Activewear

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gildan Activewear may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Levi Strauss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gildan Activewear and Levi Strauss

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

The idea behind Gildan Activewear and Levi Strauss Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.