Correlation Between Brilliant Earth and AKA Brands
Can any of the company-specific risk be diversified away by investing in both Brilliant Earth and AKA 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 Brilliant Earth and AKA Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Earth Group and AKA Brands Holding, you can compare the effects of market volatilities on Brilliant Earth and AKA 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 Brilliant Earth with a short position of AKA Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Earth and AKA Brands.
Diversification Opportunities for Brilliant Earth and AKA Brands
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brilliant and AKA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands Holding and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and AKA Brands go up and down completely randomly.
Pair Corralation between Brilliant Earth and AKA Brands
Given the investment horizon of 90 days Brilliant Earth Group is expected to generate 0.8 times more return on investment than AKA Brands. However, Brilliant Earth Group is 1.25 times less risky than AKA Brands. It trades about 0.06 of its potential returns per unit of risk. AKA Brands Holding is currently generating about -0.12 per unit of risk. If you would invest 167.00 in Brilliant Earth Group on August 27, 2024 and sell it today you would earn a total of 6.00 from holding Brilliant Earth Group or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brilliant Earth Group vs. AKA Brands Holding
Performance |
| Timeline |
| Brilliant Earth Group |
| AKA Brands Holding |
Brilliant Earth and AKA Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Earth and AKA Brands
The main advantage of trading using opposite Brilliant Earth and AKA Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Earth position performs unexpectedly, AKA 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 AKA Brands will offset losses from the drop in AKA Brands' long position.| Brilliant Earth vs. Capri Holdings | Brilliant Earth vs. Movado Group | Brilliant Earth vs. Tapestry | Brilliant Earth vs. TheRealReal |
| AKA Brands vs. Brilliant Earth Group | AKA Brands vs. Lulus Fashion Lounge | AKA Brands vs. Torrid Holdings | AKA Brands vs. Aveanna Healthcare Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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