Correlation Between G III and United Breweries
Can any of the company-specific risk be diversified away by investing in both G III and United Breweries 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 United Breweries 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 United Breweries Co, you can compare the effects of market volatilities on G III and United Breweries 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 United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and United Breweries.
Diversification Opportunities for G III and United Breweries
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GI4 and United is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries 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 United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of G III i.e., G III and United Breweries go up and down completely randomly.
Pair Corralation between G III and United Breweries
Assuming the 90 days trading horizon G III is expected to generate 4.39 times less return on investment than United Breweries. But when comparing it to its historical volatility, G III Apparel Group is 1.0 times less risky than United Breweries. It trades about 0.05 of its potential returns per unit of risk. United Breweries Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,060 in United Breweries Co on November 2, 2024 and sell it today you would earn a total of 70.00 from holding United Breweries Co or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. United Breweries Co
Performance |
| Timeline |
| G III Apparel |
| United Breweries |
G III and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and United Breweries
The main advantage of trading using opposite G III and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| G III vs. SILVER BULLET DATA | G III vs. Apollo Investment Corp | G III vs. Extra Space Storage | G III vs. TERADATA |
| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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