Correlation Between G III and GMO Internet
Can any of the company-specific risk be diversified away by investing in both G III and GMO Internet 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 GMO Internet 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 GMO Internet, you can compare the effects of market volatilities on G III and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and GMO Internet.
Diversification Opportunities for G III and GMO Internet
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GI4 and GMO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of G III i.e., G III and GMO Internet go up and down completely randomly.
Pair Corralation between G III and GMO Internet
Assuming the 90 days trading horizon G III Apparel Group is expected to under-perform the GMO Internet. In addition to that, G III is 1.03 times more volatile than GMO Internet. It trades about -0.01 of its total potential returns per unit of risk. GMO Internet is currently generating about 0.11 per unit of volatility. If you would invest 1,620 in GMO Internet on November 1, 2024 and sell it today you would earn a total of 50.00 from holding GMO Internet or generate 3.09% 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. GMO Internet
Performance |
| Timeline |
| G III Apparel |
| GMO Internet |
G III and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and GMO Internet
The main advantage of trading using opposite G III and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.| G III vs. United Airlines Holdings | G III vs. JD SPORTS FASH | G III vs. Singapore Airlines Limited | G III vs. Nok Airlines PCL |
| GMO Internet vs. BANKINTER ADR 2007 | GMO Internet vs. Alliance Data Systems | GMO Internet vs. Discover Financial Services | GMO Internet vs. Automatic Data Processing |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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