Correlation Between Canada Goose and BZAM

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

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

Diversification Opportunities for Canada Goose and BZAM

0.69

Correlation Coefficient

Canada Goose  BZAM

Poor diversification

The 3 months correlation between Canada and BZAM is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM and Canada Goose 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 Canada Goose Holdings are associated (or correlated) with BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Canada Goose i.e., Canada Goose and BZAM go up and down completely randomly.

Pair Corralation between Canada Goose and BZAM

Given the investment horizon of 90 days Canada Goose Holdings is expected to under-perform the BZAM. But the stock apears to be less risky and, when comparing its historical volatility, Canada Goose Holdings is 76.22 times less risky than BZAM. The stock trades about -0.09 of its potential returns per unit of risk. The BZAM is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.35  in BZAM on September 26, 2024 and sell it today you would lose (1.35) from holding BZAM or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Canada Goose Holdings  vs.  BZAM

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings 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 basic 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.

BZAM

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BZAM are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, BZAM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canada Goose and BZAM

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

The idea behind Canada Goose Holdings and BZAM 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.