Correlation Between Target and G-III Apparel

Can any of the company-specific risk be diversified away by investing in both Target and G-III Apparel 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 Target and G-III Apparel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Target and G III Apparel Group, you can compare the effects of market volatilities on Target and G-III Apparel 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 Target with a short position of G-III Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and G-III Apparel.

Diversification Opportunities for Target and G-III Apparel

0.06

Correlation Coefficient

Target  G-III Apparel

Significant diversification

The 3 months correlation between Target and G-III is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Target 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 Target 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 Target are associated (or correlated) with G-III Apparel. 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 Target i.e., Target and G-III Apparel go up and down completely randomly.

Pair Corralation between Target and G-III Apparel

Assuming the 90 days horizon Target is expected to under-perform the G-III Apparel. In addition to that, Target is 2.21 times more volatile than G III Apparel Group. It trades about -0.06 of its total potential returns per unit of risk. G III Apparel Group is currently generating about 0.2 per unit of volatility. If you would invest  2,720  in G III Apparel Group on September 5, 2024 and sell it today you would earn a total of  280.00  from holding G III Apparel Group or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Target  vs.  G III Apparel Group

Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Target is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

G III Apparel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, G-III Apparel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Target and G-III Apparel

The main advantage of trading using opposite Target and G-III Apparel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, G-III Apparel 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 Apparel will offset losses from the drop in G-III Apparel's long position.

The idea behind Target and G III Apparel Group 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.