Correlation Between Talon International and G III

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

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

Diversification Opportunities for Talon International and G III

-0.43

Correlation Coefficient

Talon International  G III

Very good diversification

The 3 months correlation between Talon and GIII is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Talon International 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 Talon International 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 Talon International are associated (or correlated) with G III. 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 Talon International i.e., Talon International and G III go up and down completely randomly.

Pair Corralation between Talon International and G III

Given the investment horizon of 90 days Talon International is expected to generate 3.1 times more return on investment than G III. However, Talon International is 3.1 times more volatile than G III Apparel Group. It trades about 0.27 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.06 per unit of risk. 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

Talon International  vs.  G III Apparel Group

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.

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.

Pair Trading with Talon International and G III

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

The idea behind Talon International 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.