Correlation Between Vince Holding and Gildan Activewear

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

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

Diversification Opportunities for Vince Holding and Gildan Activewear

-0.16

Correlation Coefficient

Vince Holding  Gildan Activewear

Good diversification

The 3 months correlation between Vince and Gildan is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vince Holding Corp and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Vince Holding 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 Vince Holding Corp are associated (or correlated) with Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Vince Holding i.e., Vince Holding and Gildan Activewear go up and down completely randomly.

Pair Corralation between Vince Holding and Gildan Activewear

Given the investment horizon of 90 days Vince Holding Corp is expected to generate 13.78 times more return on investment than Gildan Activewear. However, Vince Holding is 13.78 times more volatile than Gildan Activewear. It trades about 0.11 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.13 per unit of risk. If you would invest  170.00  in Vince Holding Corp on November 28, 2024 and sell it today you would earn a total of  102.00  from holding Vince Holding Corp or generate 60.0% return on investment over 90 days.

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

Vince Holding Corp  vs.  Gildan Activewear

Vince Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vince Holding Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Vince Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gildan Activewear

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Gildan Activewear may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Vince Holding and Gildan Activewear

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

The idea behind Vince Holding Corp and Gildan Activewear 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.