Correlation Between Designer Brands and Beauty Health
Can any of the company-specific risk be diversified away by investing in both Designer Brands and Beauty Health 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 Beauty Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Beauty Health Co, you can compare the effects of market volatilities on Designer Brands and Beauty Health 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 Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Beauty Health.
Diversification Opportunities for Designer Brands and Beauty Health
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Designer and Beauty is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health 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 Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Designer Brands i.e., Designer Brands and Beauty Health go up and down completely randomly.
Pair Corralation between Designer Brands and Beauty Health
Considering the 90-day investment horizon Designer Brands is expected to generate 0.68 times more return on investment than Beauty Health. However, Designer Brands is 1.46 times less risky than Beauty Health. It trades about -0.01 of its potential returns per unit of risk. Beauty Health Co is currently generating about -0.03 per unit of risk. If you would invest 960.00 in Designer Brands on November 2, 2024 and sell it today you would lose (455.00) from holding Designer Brands or give up 47.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Designer Brands vs. Beauty Health Co
Performance |
| Timeline |
| Designer Brands |
| Beauty Health |
Designer Brands and Beauty Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Beauty Health
The main advantage of trading using opposite Designer Brands and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health's long position.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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