Correlation Between Designer Brands and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both Designer Brands and FAST RETAIL 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 Designer Brands and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and FAST RETAIL ADR, you can compare the effects of market volatilities on Designer Brands and FAST RETAIL 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 Designer Brands with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and FAST RETAIL.
Diversification Opportunities for Designer Brands and FAST RETAIL
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Designer and FAST is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR and Designer Brands 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 Designer Brands are associated (or correlated) with FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of Designer Brands i.e., Designer Brands and FAST RETAIL go up and down completely randomly.
Pair Corralation between Designer Brands and FAST RETAIL
If you would invest (100.00) in Designer Brands on November 3, 2024 and sell it today you would earn a total of 100.00 from holding Designer Brands or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Designer Brands vs. FAST RETAIL ADR
Performance |
| Timeline |
| Designer Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| FAST RETAIL ADR |
Designer Brands and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and FAST RETAIL
The main advantage of trading using opposite Designer Brands and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| Designer Brands vs. BII Railway Transportation | Designer Brands vs. SLR Investment Corp | Designer Brands vs. USWE SPORTS AB | Designer Brands vs. CHRYSALIS INVESTMENTS LTD |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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