Correlation Between Iridium Communications and G III
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and G III 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 Iridium Communications and G III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and G III Apparel Group, you can compare the effects of market volatilities on Iridium Communications and G III 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 Iridium Communications with a short position of G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and G III.
Diversification Opportunities for Iridium Communications and G III
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iridium and GI4 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel and Iridium Communications 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 Iridium Communications are associated (or correlated) with G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Iridium Communications i.e., Iridium Communications and G III go up and down completely randomly.
Pair Corralation between Iridium Communications and G III
Assuming the 90 days horizon Iridium Communications is expected to under-perform the G III. But the stock apears to be less risky and, when comparing its historical volatility, Iridium Communications is 1.16 times less risky than G III. The stock trades about -0.01 of its potential returns per unit of risk. The G III Apparel Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,600 in G III Apparel Group on September 14, 2024 and sell it today you would earn a total of 680.00 from holding G III Apparel Group or generate 26.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. G III Apparel Group
Performance |
| Timeline |
| Iridium Communications |
| G III Apparel |
Iridium Communications and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and G III
The main advantage of trading using opposite Iridium Communications and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. SIVERS SEMICONDUCTORS AB | Iridium Communications vs. Norsk Hydro ASA | Iridium Communications vs. Reliance Steel Aluminum |
| G III vs. Iridium Communications | G III vs. SBA Communications Corp | G III vs. Singapore Telecommunications Limited | G III vs. Highlight Communications AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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