Correlation Between News and G III
Can any of the company-specific risk be diversified away by investing in both News and G III 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 News and G III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corporation and G III Apparel Group, you can compare the effects of market volatilities on News and G III 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 News with a short position of G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of News and G III.
Diversification Opportunities for News and G III
Very weak diversification
The 3 months correlation between News and GI4 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding News Corp. and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel and News 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 News Corporation are associated (or correlated) with G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of News i.e., News and G III go up and down completely randomly.
Pair Corralation between News and G III
Assuming the 90 days trading horizon News Corporation is expected to generate 0.58 times more return on investment than G III. However, News Corporation is 1.72 times less risky than G III. It trades about 0.08 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.0 per unit of risk. If you would invest 2,202 in News Corporation on September 12, 2024 and sell it today you would earn a total of 798.00 from holding News Corporation or generate 36.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp. vs. G III Apparel Group
Performance |
| Timeline |
| News |
| G III Apparel |
News and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News and G III
The main advantage of trading using opposite News and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| News vs. Nippon Steel | News vs. Daido Steel Co | News vs. Silicon Motion Technology | News vs. INDO RAMA SYNTHETIC |
| G III vs. Strategic Education | G III vs. Magic Software Enterprises | G III vs. IDP EDUCATION LTD | G III vs. TAL Education 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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