Correlation Between G III and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both G III and NorAm Drilling 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 NorAm Drilling 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 NorAm Drilling AS, you can compare the effects of market volatilities on G III and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and NorAm Drilling.
Diversification Opportunities for G III and NorAm Drilling
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GI4 and NorAm is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of G III i.e., G III and NorAm Drilling go up and down completely randomly.
Pair Corralation between G III and NorAm Drilling
Assuming the 90 days horizon G III is expected to generate 2.13 times less return on investment than NorAm Drilling. But when comparing it to its historical volatility, G III Apparel Group is 1.73 times less risky than NorAm Drilling. It trades about 0.1 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 269.00 in NorAm Drilling AS on September 12, 2024 and sell it today you would earn a total of 25.00 from holding NorAm Drilling AS or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
G III Apparel Group vs. NorAm Drilling AS
Performance |
| Timeline |
| G III Apparel |
| NorAm Drilling AS |
G III and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and NorAm Drilling
The main advantage of trading using opposite G III and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.| G III vs. Strategic Education | G III vs. Magic Software Enterprises | G III vs. IDP EDUCATION LTD | G III vs. TAL Education Group |
| NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |