Correlation Between G-III Apparel and Lithia Motors
Can any of the company-specific risk be diversified away by investing in both G-III Apparel and Lithia Motors 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 Lithia Motors 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 Lithia Motors, you can compare the effects of market volatilities on G-III Apparel and Lithia Motors 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 Lithia Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III Apparel and Lithia Motors.
Diversification Opportunities for G-III Apparel and Lithia Motors
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between G-III and Lithia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Lithia Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithia Motors 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 Lithia Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithia Motors has no effect on the direction of G-III Apparel i.e., G-III Apparel and Lithia Motors go up and down completely randomly.
Pair Corralation between G-III Apparel and Lithia Motors
Assuming the 90 days trading horizon G III Apparel Group is expected to under-perform the Lithia Motors. In addition to that, G-III Apparel is 1.51 times more volatile than Lithia Motors. It trades about -0.22 of its total potential returns per unit of risk. Lithia Motors is currently generating about -0.31 per unit of volatility. If you would invest 36,000 in Lithia Motors on October 13, 2024 and sell it today you would lose (2,200) from holding Lithia Motors or give up 6.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. Lithia Motors
Performance |
| Timeline |
| G III Apparel |
| Lithia Motors |
G-III Apparel and Lithia Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G-III Apparel and Lithia Motors
The main advantage of trading using opposite G-III Apparel and Lithia Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G-III Apparel position performs unexpectedly, Lithia Motors 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 Lithia Motors will offset losses from the drop in Lithia Motors' long position.| G-III Apparel vs. Zoom Video Communications | G-III Apparel vs. HANOVER INSURANCE | G-III Apparel vs. REVO INSURANCE SPA | G-III Apparel vs. Universal Insurance Holdings |
| Lithia Motors vs. G III Apparel Group | Lithia Motors vs. RCI Hospitality Holdings | Lithia Motors vs. MEDICAL FACILITIES NEW | Lithia Motors vs. CLOVER HEALTH INV |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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