Correlation Between UNITED UTILITIES and G III

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

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

Diversification Opportunities for UNITED UTILITIES and G III

0.46

Correlation Coefficient

UNITED UTILITIES  G III

Very weak diversification

The 3 months correlation between UNITED and GI4 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR 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 UNITED UTILITIES 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 UNITED UTILITIES GR 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 UNITED UTILITIES i.e., UNITED UTILITIES and G III go up and down completely randomly.

Pair Corralation between UNITED UTILITIES and G III

Assuming the 90 days trading horizon UNITED UTILITIES is expected to generate 1.5 times less return on investment than G III. But when comparing it to its historical volatility, UNITED UTILITIES GR is 3.01 times less risky than G III. It trades about 0.17 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,380  in G III Apparel Group on September 3, 2024 and sell it today you would earn a total of  420.00  from holding G III Apparel Group or generate 17.65% return on investment over 90 days.

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

UNITED UTILITIES GR  vs.  G III Apparel Group

UNITED UTILITIES

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED UTILITIES GR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, UNITED UTILITIES unveiled solid returns over the last few months and may actually be approaching a breakup point.

G III Apparel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, G III unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITED UTILITIES and G III

The main advantage of trading using opposite UNITED UTILITIES and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES 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 UNITED UTILITIES GR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.