Correlation Between Gildan Activewear and Richelieu Hardware

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

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

Diversification Opportunities for Gildan Activewear and Richelieu Hardware

0.55

Correlation Coefficient

Gildan Activewear  Richelieu Hardware

Very weak diversification

The 3 months correlation between Gildan and Richelieu is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Richelieu Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richelieu Hardware 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 Richelieu Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richelieu Hardware has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Richelieu Hardware go up and down completely randomly.

Pair Corralation between Gildan Activewear and Richelieu Hardware

Assuming the 90 days trading horizon Gildan Activewear is expected to generate 1.21 times more return on investment than Richelieu Hardware. However, Gildan Activewear is 1.21 times more volatile than Richelieu Hardware. It trades about 0.06 of its potential returns per unit of risk. Richelieu Hardware is currently generating about -0.01 per unit of risk. If you would invest  4,087  in Gildan Activewear on March 31, 2025 and sell it today you would earn a total of  2,599  from holding Gildan Activewear or generate 63.59% return on investment over 90 days.

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

Gildan Activewear  vs.  Richelieu Hardware

Gildan Activewear

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Gildan Activewear may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Richelieu Hardware

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Richelieu Hardware are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Richelieu Hardware may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Gildan Activewear and Richelieu Hardware

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

The idea behind Gildan Activewear and Richelieu Hardware 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.