Correlation Between G-III Apparel and AM EAGLE

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

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

Diversification Opportunities for G-III Apparel and AM EAGLE

-0.01

Correlation Coefficient

G-III Apparel  AM EAGLE

Good diversification

The 3 months correlation between G-III and AFG is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and G-III Apparel 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 G III Apparel Group are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of G-III Apparel i.e., G-III Apparel and AM EAGLE go up and down completely randomly.

Pair Corralation between G-III Apparel and AM EAGLE

Assuming the 90 days horizon G III Apparel Group is expected to generate 1.11 times more return on investment than AM EAGLE. However, G-III Apparel is 1.11 times more volatile than AM EAGLE OUTFITTERS. It trades about 0.07 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.03 per unit of risk. If you would invest  1,260  in G III Apparel Group on September 3, 2024 and sell it today you would earn a total of  1,540  from holding G III Apparel Group or generate 122.22% return on investment over 90 days.

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

G III Apparel Group  vs.  AM EAGLE OUTFITTERS

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. Despite nearly fragile basic indicators, G-III Apparel reported solid returns over the last few months and may actually be approaching a breakup point.

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AM EAGLE OUTFITTERS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, AM EAGLE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with G-III Apparel and AM EAGLE

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

The idea behind G III Apparel Group and AM EAGLE OUTFITTERS 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.