Correlation Between Designer Brands and On Holding
Can any of the company-specific risk be diversified away by investing in both Designer Brands and On Holding 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 On Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and On Holding, you can compare the effects of market volatilities on Designer Brands and On Holding 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 On Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and On Holding.
Diversification Opportunities for Designer Brands and On Holding
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Designer and ONON is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and On Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on On Holding 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 On Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of On Holding has no effect on the direction of Designer Brands i.e., Designer Brands and On Holding go up and down completely randomly.
Pair Corralation between Designer Brands and On Holding
Considering the 90-day investment horizon Designer Brands is expected to under-perform the On Holding. In addition to that, Designer Brands is 1.81 times more volatile than On Holding. It trades about -0.16 of its total potential returns per unit of risk. On Holding is currently generating about 0.16 per unit of volatility. If you would invest 5,462 in On Holding on November 6, 2024 and sell it today you would earn a total of 390.00 from holding On Holding or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. On Holding
Performance |
| Timeline |
| Designer Brands |
| On Holding |
Designer Brands and On Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and On Holding
The main advantage of trading using opposite Designer Brands and On Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, On Holding 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 On Holding will offset losses from the drop in On Holding's long position.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
| On Holding vs. Crocs Inc | On Holding vs. Skechers USA | On Holding vs. Nike Inc | On Holding vs. Designer 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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