Correlation Between Designer Brands and Dillards
Can any of the company-specific risk be diversified away by investing in both Designer Brands and Dillards 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 Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Dillards, you can compare the effects of market volatilities on Designer Brands and Dillards 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 Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Dillards.
Diversification Opportunities for Designer Brands and Dillards
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Designer and Dillards is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Designer Brands i.e., Designer Brands and Dillards go up and down completely randomly.
Pair Corralation between Designer Brands and Dillards
Considering the 90-day investment horizon Designer Brands is expected to under-perform the Dillards. In addition to that, Designer Brands is 1.47 times more volatile than Dillards. It trades about -0.08 of its total potential returns per unit of risk. Dillards is currently generating about 0.03 per unit of volatility. If you would invest 41,399 in Dillards on August 27, 2024 and sell it today you would earn a total of 3,216 from holding Dillards or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. Dillards
Performance |
| Timeline |
| Designer Brands |
| Dillards |
Designer Brands and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Dillards
The main advantage of trading using opposite Designer Brands and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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