Correlation Between G III and SILICON LABORATOR

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

Diversification Opportunities for G III and SILICON LABORATOR

0.65

Correlation Coefficient

G III  SILICON LABORATOR

Poor diversification

The 3 months correlation between GI4 and SILICON is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and SILICON LABORATOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILICON LABORATOR 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 SILICON LABORATOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILICON LABORATOR has no effect on the direction of G III i.e., G III and SILICON LABORATOR go up and down completely randomly.

Pair Corralation between G III and SILICON LABORATOR

Assuming the 90 days trading horizon G III Apparel Group is expected to generate 1.13 times more return on investment than SILICON LABORATOR. However, G III is 1.13 times more volatile than SILICON LABORATOR. It trades about 0.06 of its potential returns per unit of risk. SILICON LABORATOR is currently generating about 0.0 per unit of risk. If you would invest  1,530  in G III Apparel Group on October 26, 2024 and sell it today you would earn a total of  1,490  from holding G III Apparel Group or generate 97.39% return on investment over 90 days.

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

G III Apparel Group  vs.  SILICON LABORATOR

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 is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SILICON LABORATOR

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SILICON LABORATOR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SILICON LABORATOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G III and SILICON LABORATOR

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

The idea behind G III Apparel Group and SILICON LABORATOR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.