Correlation Between G-III Apparel and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both G-III Apparel 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 Apparel 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 Apparel 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 Apparel with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III Apparel and NorAm Drilling.
Diversification Opportunities for G-III Apparel and NorAm Drilling
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between G-III and NorAm is 0.09. 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 Apparel 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 Apparel i.e., G-III Apparel and NorAm Drilling go up and down completely randomly.
Pair Corralation between G-III Apparel and NorAm Drilling
Assuming the 90 days horizon G III Apparel Group is expected to under-perform the NorAm Drilling. But the stock apears to be less risky and, when comparing its historical volatility, G III Apparel Group is 2.92 times less risky than NorAm Drilling. The stock trades about -0.19 of its potential returns per unit of risk. The NorAm Drilling AS is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 220.00 in NorAm Drilling AS on October 22, 2024 and sell it today you would earn a total of 85.00 from holding NorAm Drilling AS or generate 38.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. NorAm Drilling AS
Performance |
| Timeline |
| G III Apparel |
| NorAm Drilling AS |
G-III Apparel and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G-III Apparel and NorAm Drilling
The main advantage of trading using opposite G-III Apparel and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G-III Apparel 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 Apparel vs. PennantPark Investment | G-III Apparel vs. Siamgas And Petrochemicals | G-III Apparel vs. Chuangs China Investments | G-III Apparel vs. CARSALESCOM |
| NorAm Drilling vs. GLG LIFE TECH | NorAm Drilling vs. Firan Technology Group | NorAm Drilling vs. URBAN OUTFITTERS | NorAm Drilling vs. Vienna Insurance Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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