Correlation Between G III and VF

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

Diversification Opportunities for G III and VF

-0.19

Correlation Coefficient

G III  VF

Good diversification

The 3 months correlation between GIII and VF is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of G III i.e., G III and VF go up and down completely randomly.

Pair Corralation between G III and VF

Given the investment horizon of 90 days G III Apparel Group is expected to under-perform the VF. But the stock apears to be less risky and, when comparing its historical volatility, G III Apparel Group is 1.25 times less risky than VF. The stock trades about -0.36 of its potential returns per unit of risk. The VF Corporation is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,599  in VF Corporation on November 28, 2024 and sell it today you would lose (40.00) from holding VF Corporation or give up 1.54% of portfolio value over 90 days.

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

G III Apparel Group  vs.  VF Corp.

G III Apparel

Risk-Adjusted Performance

Very Weak

Over the last 90 days G III Apparel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

VF Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, VF exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G III and VF

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

The idea behind G III Apparel Group and VF Corporation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.