Correlation Between G III and Alphabet

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Can any of the company-specific risk be diversified away by investing in both G III and Alphabet 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 G III and Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and Alphabet Inc Class C, you can compare the effects of market volatilities on G III and Alphabet 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 G III with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and Alphabet.

Diversification Opportunities for G III and Alphabet

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between GIII and Alphabet is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C and G III 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 G III Apparel Group are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of G III i.e., G III and Alphabet go up and down completely randomly.

Pair Corralation between G III and Alphabet

Given the investment horizon of 90 days G III Apparel Group is expected to generate 1.9 times more return on investment than Alphabet. However, G III is 1.9 times more volatile than Alphabet Inc Class C. It trades about 0.07 of its potential returns per unit of risk. Alphabet Inc Class C is currently generating about 0.12 per unit of risk. If you would invest  1,661  in G III Apparel Group on January 24, 2024 and sell it today you would earn a total of  1,123  from holding G III Apparel Group or generate 67.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

G III Apparel Group  vs.  Alphabet Inc Class C

 Performance 
       Timeline  
G III Apparel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days G III Apparel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, G III is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
Alphabet Class C 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alphabet is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

G III and Alphabet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with G III and Alphabet

The main advantage of trading using opposite G III and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.
The idea behind G III Apparel Group and Alphabet Inc Class C 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.
Check out your portfolio center.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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