Correlation Between Duluth Holdings and Groupon
Can any of the company-specific risk be diversified away by investing in both Duluth Holdings and Groupon 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 Duluth Holdings and Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duluth Holdings and Groupon, you can compare the effects of market volatilities on Duluth Holdings and Groupon 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 Duluth Holdings with a short position of Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duluth Holdings and Groupon.
Diversification Opportunities for Duluth Holdings and Groupon
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Duluth and Groupon is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Duluth Holdings and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Duluth Holdings 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 Duluth Holdings are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Duluth Holdings i.e., Duluth Holdings and Groupon go up and down completely randomly.
Pair Corralation between Duluth Holdings and Groupon
Given the investment horizon of 90 days Duluth Holdings is expected to under-perform the Groupon. But the stock apears to be less risky and, when comparing its historical volatility, Duluth Holdings is 2.09 times less risky than Groupon. The stock trades about -0.09 of its potential returns per unit of risk. The Groupon is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,201 in Groupon on December 18, 2024 and sell it today you would earn a total of 397.00 from holding Groupon or generate 33.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duluth Holdings vs. Groupon
Performance |
| Timeline |
| Duluth Holdings |
| Groupon |
Duluth Holdings and Groupon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duluth Holdings and Groupon
The main advantage of trading using opposite Duluth Holdings and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duluth Holdings position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.| Duluth Holdings vs. Zumiez Inc | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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