Correlation Between MGIC INVESTMENT and G-III Apparel

Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and G-III Apparel 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 MGIC INVESTMENT and G-III Apparel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MGIC INVESTMENT and G III Apparel Group, you can compare the effects of market volatilities on MGIC INVESTMENT and G-III Apparel 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 MGIC INVESTMENT with a short position of G-III Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and G-III Apparel.

Diversification Opportunities for MGIC INVESTMENT and G-III Apparel

-0.12

Correlation Coefficient

MGIC INVESTMENT  G-III Apparel

Good diversification

The 3 months correlation between MGIC and G-III is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel and MGIC INVESTMENT 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 MGIC INVESTMENT are associated (or correlated) with G-III Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and G-III Apparel go up and down completely randomly.

Pair Corralation between MGIC INVESTMENT and G-III Apparel

Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 1.56 times less return on investment than G-III Apparel. But when comparing it to its historical volatility, MGIC INVESTMENT is 2.69 times less risky than G-III Apparel. It trades about 0.12 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,480  in G III Apparel Group on October 24, 2024 and sell it today you would earn a total of  1,500  from holding G III Apparel Group or generate 101.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.76%
Values	Daily Returns

MGIC INVESTMENT  vs.  G III Apparel Group

MGIC INVESTMENT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, MGIC INVESTMENT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. In spite of comparatively fragile basic indicators, G-III Apparel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MGIC INVESTMENT and G-III Apparel

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

The idea behind MGIC INVESTMENT and G III Apparel Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.