Correlation Between G III and Otello ASA
Can any of the company-specific risk be diversified away by investing in both G III and Otello ASA 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 Otello ASA 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 Otello ASA, you can compare the effects of market volatilities on G III and Otello ASA 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 Otello ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and Otello ASA.
Diversification Opportunities for G III and Otello ASA
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GI4 and Otello is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Otello ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otello ASA 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 Otello ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otello ASA has no effect on the direction of G III i.e., G III and Otello ASA go up and down completely randomly.
Pair Corralation between G III and Otello ASA
Assuming the 90 days trading horizon G III Apparel Group is expected to generate 1.35 times more return on investment than Otello ASA. However, G III is 1.35 times more volatile than Otello ASA. It trades about 0.07 of its potential returns per unit of risk. Otello ASA is currently generating about 0.0 per unit of risk. If you would invest 1,410 in G III Apparel Group on October 31, 2024 and sell it today you would earn a total of 1,690 from holding G III Apparel Group or generate 119.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. Otello ASA
Performance |
| Timeline |
| G III Apparel |
| Otello ASA |
G III and Otello ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and Otello ASA
The main advantage of trading using opposite G III and Otello ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III position performs unexpectedly, Otello ASA 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 Otello ASA will offset losses from the drop in Otello ASA's long position.The idea behind G III Apparel Group and Otello ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Otello ASA vs. Palo Alto Networks | Otello ASA vs. Fortinet | Otello ASA vs. Autodesk | Otello ASA vs. HubSpot |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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