Correlation Between Designer Brands and Forward Industries
Can any of the company-specific risk be diversified away by investing in both Designer Brands and Forward Industries 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 Forward Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Forward Industries, you can compare the effects of market volatilities on Designer Brands and Forward Industries 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 Forward Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Forward Industries.
Diversification Opportunities for Designer Brands and Forward Industries
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Designer and Forward is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Forward Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Industries 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 Forward Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Industries has no effect on the direction of Designer Brands i.e., Designer Brands and Forward Industries go up and down completely randomly.
Pair Corralation between Designer Brands and Forward Industries
Considering the 90-day investment horizon Designer Brands is expected to under-perform the Forward Industries. But the stock apears to be less risky and, when comparing its historical volatility, Designer Brands is 1.44 times less risky than Forward Industries. The stock trades about -0.04 of its potential returns per unit of risk. The Forward Industries is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Forward Industries on September 1, 2024 and sell it today you would lose (294.00) from holding Forward Industries or give up 42.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. Forward Industries
Performance |
| Timeline |
| Designer Brands |
| Forward Industries |
Designer Brands and Forward Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Forward Industries
The main advantage of trading using opposite Designer Brands and Forward Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, Forward Industries 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 Forward Industries will offset losses from the drop in Forward Industries' long position.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
| Forward Industries vs. Crocs Inc | Forward Industries vs. On Holding | Forward Industries vs. Deckers Outdoor | Forward Industries vs. Adidas AG ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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