Correlation Between Auddia and Digital Brands
Can any of the company-specific risk be diversified away by investing in both Auddia and Digital Brands 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 Auddia and Digital Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auddia Inc and Digital Brands Group, you can compare the effects of market volatilities on Auddia and Digital Brands 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 Auddia with a short position of Digital Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auddia and Digital Brands.
Diversification Opportunities for Auddia and Digital Brands
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Auddia and Digital is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Auddia Inc and Digital Brands Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Brands Group and Auddia 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 Auddia Inc are associated (or correlated) with Digital Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Brands Group has no effect on the direction of Auddia i.e., Auddia and Digital Brands go up and down completely randomly.
Pair Corralation between Auddia and Digital Brands
Assuming the 90 days horizon Auddia is expected to generate 3.5 times less return on investment than Digital Brands. In addition to that, Auddia is 1.2 times more volatile than Digital Brands Group. It trades about 0.02 of its total potential returns per unit of risk. Digital Brands Group is currently generating about 0.1 per unit of volatility. If you would invest 10.00 in Digital Brands Group on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Digital Brands Group or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
Auddia Inc vs. Digital Brands Group
Performance |
| Timeline |
| Auddia Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Digital Brands Group |
Auddia and Digital Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auddia and Digital Brands
The main advantage of trading using opposite Auddia and Digital Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auddia position performs unexpectedly, Digital Brands 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 Digital Brands will offset losses from the drop in Digital Brands' long position.| Auddia vs. Eldorado Gold Corp | Auddia vs. Usio Inc | Auddia vs. Evertz Technologies Limited | Auddia vs. Cementos Pacasmayo SAA |
| Digital Brands vs. Burlington Stores | Digital Brands vs. Urban Outfitters | Digital Brands vs. American Eagle Outfitters | Digital Brands vs. Childrens Place |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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