Correlation Between Build A and Designer Brands
Can any of the company-specific risk be diversified away by investing in both Build A and Designer 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 Build A and Designer Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Build A Bear Workshop and Designer Brands, you can compare the effects of market volatilities on Build A and Designer 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 Build A with a short position of Designer Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build A and Designer Brands.
Diversification Opportunities for Build A and Designer Brands
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Build and Designer is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Build A Bear Workshop and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and Build A 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 Build A Bear Workshop are associated (or correlated) with Designer Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Designer Brands has no effect on the direction of Build A i.e., Build A and Designer Brands go up and down completely randomly.
Pair Corralation between Build A and Designer Brands
Considering the 90-day investment horizon Build A Bear Workshop is expected to generate 0.83 times more return on investment than Designer Brands. However, Build A Bear Workshop is 1.21 times less risky than Designer Brands. It trades about 0.2 of its potential returns per unit of risk. Designer Brands is currently generating about -0.22 per unit of risk. If you would invest 3,085 in Build A Bear Workshop on August 26, 2024 and sell it today you would earn a total of 734.00 from holding Build A Bear Workshop or generate 23.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Build A Bear Workshop vs. Designer Brands
Performance |
| Timeline |
| Build A Bear |
| Designer Brands |
Build A and Designer Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Build A and Designer Brands
The main advantage of trading using opposite Build A and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Build A position performs unexpectedly, Designer 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 Designer Brands will offset losses from the drop in Designer Brands' long position.The idea behind Build A Bear Workshop and Designer Brands 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.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |