Correlation Between G-III Apparel and ViacomCBS

Can any of the company-specific risk be diversified away by investing in both G-III Apparel and ViacomCBS 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 ViacomCBS 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 ViacomCBS, you can compare the effects of market volatilities on G-III Apparel and ViacomCBS 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 ViacomCBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III Apparel and ViacomCBS.

Diversification Opportunities for G-III Apparel and ViacomCBS

0.26

Correlation Coefficient

G-III Apparel  ViacomCBS

Modest diversification

The 3 months correlation between G-III and ViacomCBS is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and ViacomCBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViacomCBS 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 ViacomCBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViacomCBS has no effect on the direction of G-III Apparel i.e., G-III Apparel and ViacomCBS go up and down completely randomly.

Pair Corralation between G-III Apparel and ViacomCBS

Assuming the 90 days trading horizon G III Apparel Group is expected to generate 0.93 times more return on investment than ViacomCBS. However, G III Apparel Group is 1.08 times less risky than ViacomCBS. It trades about 0.06 of its potential returns per unit of risk. ViacomCBS is currently generating about 0.01 per unit of risk. If you would invest  1,550  in G III Apparel Group on October 23, 2024 and sell it today you would earn a total of  1,410  from holding G III Apparel Group or generate 90.97% return on investment over 90 days.

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

G III Apparel Group  vs.  ViacomCBS

G III Apparel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, G-III Apparel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ViacomCBS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ViacomCBS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ViacomCBS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with G-III Apparel and ViacomCBS

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

The idea behind G III Apparel Group and ViacomCBS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.