Correlation Between G III and NISOURCE

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

Diversification Opportunities for G III and NISOURCE

-0.37

Correlation Coefficient

G III  NISOURCE

Very good diversification

The 3 months correlation between GIII and NISOURCE is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE INC has no effect on the direction of G III i.e., G III and NISOURCE go up and down completely randomly.

Pair Corralation between G III and NISOURCE

Given the investment horizon of 90 days G III Apparel Group is expected to generate 2.44 times more return on investment than NISOURCE. However, G III is 2.44 times more volatile than NISOURCE INC. It trades about 0.07 of its potential returns per unit of risk. NISOURCE INC is currently generating about -0.18 per unit of risk. If you would invest  2,961  in G III Apparel Group on October 8, 2024 and sell it today you would earn a total of  253.00  from holding G III Apparel Group or generate 8.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.19%
Values	Daily Returns

G III Apparel Group  vs.  NISOURCE INC

G III Apparel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 5 (%) 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.

NISOURCE INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NISOURCE INC investors.

Pair Trading with G III and NISOURCE

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

The idea behind G III Apparel Group and NISOURCE INC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.