Correlation Between G III and Talon International

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

Diversification Opportunities for G III and Talon International

-0.43

Correlation Coefficient

G III  Talon International

Very good diversification

The 3 months correlation between GIII and Talon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Talon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon International 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 Talon International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon International has no effect on the direction of G III i.e., G III and Talon International go up and down completely randomly.

Pair Corralation between G III and Talon International

Given the investment horizon of 90 days G III is expected to generate 13.42 times less return on investment than Talon International. But when comparing it to its historical volatility, G III Apparel Group is 3.1 times less risky than Talon International. It trades about 0.06 of its potential returns per unit of risk. Talon International is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Talon International on October 11, 2024 and sell it today you would earn a total of  4.00  from holding Talon International or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.83%
Values	Daily Returns

G III Apparel Group  vs.  Talon International

G III Apparel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, G III may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Talon International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Talon International is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with G III and Talon International

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

The idea behind G III Apparel Group and Talon International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.