Correlation Between Gildan Activewear and Vince Holding

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

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

Diversification Opportunities for Gildan Activewear and Vince Holding

-0.07

Correlation Coefficient

Gildan Activewear  Vince Holding

Good diversification

The 3 months correlation between Gildan and Vince is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Vince Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vince Holding Corp 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 Vince Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vince Holding Corp has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Vince Holding go up and down completely randomly.

Pair Corralation between Gildan Activewear and Vince Holding

Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.31 times more return on investment than Vince Holding. However, Gildan Activewear is 3.18 times less risky than Vince Holding. It trades about -0.22 of its potential returns per unit of risk. Vince Holding Corp is currently generating about -0.55 per unit of risk. If you would invest  3,603  in Gildan Activewear on February 4, 2024 and sell it today you would lose (250.00) from holding Gildan Activewear or give up 6.94% of portfolio value over 90 days.

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

Gildan Activewear  vs.  Vince Holding Corp

Gildan Activewear

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Gildan Activewear is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Vince Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vince Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gildan Activewear and Vince Holding

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

The idea behind Gildan Activewear and Vince Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.