Correlation Between Charter Communications and G III

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

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

Diversification Opportunities for Charter Communications and G III

0.28

Correlation Coefficient

Charter Communications  G III

Modest diversification

The 3 months correlation between Charter and GI4 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and G III go up and down completely randomly.

Pair Corralation between Charter Communications and G III

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.54 times less return on investment than G III. But when comparing it to its historical volatility, Charter Communications is 1.27 times less risky than G III. It trades about 0.11 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,240  in G III Apparel Group on September 4, 2024 and sell it today you would earn a total of  740.00  from holding G III Apparel Group or generate 33.04% return on investment over 90 days.

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

Charter Communications  vs.  G III Apparel Group

Charter Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

G III Apparel

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G III unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and G III

The main advantage of trading using opposite Charter Communications and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.