Correlation Between Sterling Construction and G-III APPAREL

Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction 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 Sterling Construction and G III APPAREL GROUP, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of G-III APPAREL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and G-III APPAREL.

Diversification Opportunities for Sterling Construction and G-III APPAREL

0.53

Correlation Coefficient

Sterling Construction  G-III APPAREL

Very weak diversification

The 3 months correlation between Sterling and G-III is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction 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 Sterling Construction 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 Sterling Construction 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 Sterling Construction i.e., Sterling Construction and G-III APPAREL go up and down completely randomly.

Pair Corralation between Sterling Construction and G-III APPAREL

Assuming the 90 days horizon Sterling Construction is expected to under-perform the G-III APPAREL. In addition to that, Sterling Construction is 2.52 times more volatile than G III APPAREL GROUP. It trades about -0.09 of its total potential returns per unit of risk. G III APPAREL GROUP is currently generating about -0.2 per unit of volatility. If you would invest  3,140  in G III APPAREL GROUP on December 22, 2024 and sell it today you would lose (700.00) from holding G III APPAREL GROUP or give up 22.29% of portfolio value over 90 days.

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

Sterling Construction  vs.  G III APPAREL GROUP

Sterling Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sterling Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sterling Construction and G-III APPAREL

The main advantage of trading using opposite Sterling Construction and G-III APPAREL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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 Sterling Construction 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.