Correlation Between Guess and Aritzia

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

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

Diversification Opportunities for Guess and Aritzia

0.49

Correlation Coefficient

Guess  Aritzia

Very weak diversification

The 3 months correlation between Guess and Aritzia is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and Guess 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 Guess Inc are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Guess i.e., Guess and Aritzia go up and down completely randomly.

Pair Corralation between Guess and Aritzia

Considering the 90-day investment horizon Guess Inc is expected to under-perform the Aritzia. But the stock apears to be less risky and, when comparing its historical volatility, Guess Inc is 2.07 times less risky than Aritzia. The stock trades about -0.12 of its potential returns per unit of risk. The Aritzia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,498  in Aritzia on September 13, 2024 and sell it today you would earn a total of  38.00  from holding Aritzia or generate 1.09% return on investment over 90 days.

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

Guess Inc  vs.  Aritzia

Guess Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guess Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aritzia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guess and Aritzia

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

The idea behind Guess Inc and Aritzia 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.