Correlation Between Solo Brands and D MARKET
Can any of the company-specific risk be diversified away by investing in both Solo Brands and D MARKET 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 Solo Brands and D MARKET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and D MARKET Electronic Services, you can compare the effects of market volatilities on Solo Brands and D MARKET 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 Solo Brands with a short position of D MARKET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and D MARKET.
Diversification Opportunities for Solo Brands and D MARKET
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solo and HEPS is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and D MARKET Electronic Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D MARKET Electronic and Solo 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 Solo Brands are associated (or correlated) with D MARKET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D MARKET Electronic has no effect on the direction of Solo Brands i.e., Solo Brands and D MARKET go up and down completely randomly.
Pair Corralation between Solo Brands and D MARKET
Considering the 90-day investment horizon Solo Brands is expected to under-perform the D MARKET. But the stock apears to be less risky and, when comparing its historical volatility, Solo Brands is 2.01 times less risky than D MARKET. The stock trades about -0.02 of its potential returns per unit of risk. The D MARKET Electronic Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 268.00 in D MARKET Electronic Services on August 28, 2024 and sell it today you would earn a total of 19.00 from holding D MARKET Electronic Services or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solo Brands vs. D MARKET Electronic Services
Performance |
| Timeline |
| Solo Brands |
| D MARKET Electronic |
Solo Brands and D MARKET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and D MARKET
The main advantage of trading using opposite Solo Brands and D MARKET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands position performs unexpectedly, D MARKET 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 D MARKET will offset losses from the drop in D MARKET's long position.| Solo Brands vs. Qurate Retail Series | Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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