Correlation Between Gildan Activewear and GoPro

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

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

Diversification Opportunities for Gildan Activewear and GoPro

0.77

Correlation Coefficient

Gildan Activewear  GoPro

Poor diversification

The 3 months correlation between Gildan and GoPro is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc 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 GoPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoPro Inc has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and GoPro go up and down completely randomly.

Pair Corralation between Gildan Activewear and GoPro

Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.47 times more return on investment than GoPro. However, Gildan Activewear is 2.12 times less risky than GoPro. It trades about 0.07 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.08 per unit of risk. If you would invest  2,833  in Gildan Activewear on February 10, 2025 and sell it today you would earn a total of  1,889  from holding Gildan Activewear or generate 66.68% return on investment over 90 days.

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

Gildan Activewear  vs.  GoPro Inc

Gildan Activewear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gildan Activewear has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

GoPro Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GoPro Inc 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 basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gildan Activewear and GoPro

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

The idea behind Gildan Activewear and GoPro Inc 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.