Correlation Between CARPENTER and G III

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

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

Diversification Opportunities for CARPENTER and G III

-0.12

Correlation Coefficient

CARPENTER  G III

Good diversification

The 3 months correlation between CARPENTER and GIII is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CARPENTER TECHNOLOGY P 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 CARPENTER 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 CARPENTER TECHNOLOGY P 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 CARPENTER i.e., CARPENTER and G III go up and down completely randomly.

Pair Corralation between CARPENTER and G III

Assuming the 90 days trading horizon CARPENTER TECHNOLOGY P is expected to under-perform the G III. But the bond apears to be less risky and, when comparing its historical volatility, CARPENTER TECHNOLOGY P is 6.79 times less risky than G III. The bond trades about -0.02 of its potential returns per unit of risk. The G III Apparel Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,045  in G III Apparel Group on October 11, 2024 and sell it today you would earn a total of  175.00  from holding G III Apparel Group or generate 5.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

CARPENTER TECHNOLOGY P  vs.  G III Apparel Group

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The latest stock price disturbance, 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 CARPENTER and G III

The main advantage of trading using opposite CARPENTER and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARPENTER 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 CARPENTER TECHNOLOGY P 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.