Correlation Between G III and XBP Europe

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

Diversification Opportunities for G III and XBP Europe

0.32

Correlation Coefficient

G III  XBP Europe

Weak diversification

The 3 months correlation between GIII and XBP is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings 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 XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of G III i.e., G III and XBP Europe go up and down completely randomly.

Pair Corralation between G III and XBP Europe

Given the investment horizon of 90 days G III is expected to generate 19.13 times less return on investment than XBP Europe. But when comparing it to its historical volatility, G III Apparel Group is 9.55 times less risky than XBP Europe. It trades about 0.05 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8.00  in XBP Europe Holdings on October 24, 2024 and sell it today you would lose (5.99) from holding XBP Europe Holdings or give up 74.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	42.51%
Values	Daily Returns

G III Apparel Group  vs.  XBP Europe Holdings

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. Despite fairly strong forward indicators, G III is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

XBP Europe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XBP Europe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady technical and fundamental indicators, XBP Europe may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with G III and XBP Europe

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

The idea behind G III Apparel Group and XBP Europe Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.