Correlation Between Destination and Barnes Noble
Can any of the company-specific risk be diversified away by investing in both Destination and Barnes Noble 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 Destination and Barnes Noble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Destination XL Group and Barnes Noble Education, you can compare the effects of market volatilities on Destination and Barnes Noble 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 Destination with a short position of Barnes Noble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destination and Barnes Noble.
Diversification Opportunities for Destination and Barnes Noble
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Destination and Barnes is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Barnes Noble Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Noble Education and Destination 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 Destination XL Group are associated (or correlated) with Barnes Noble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Noble Education has no effect on the direction of Destination i.e., Destination and Barnes Noble go up and down completely randomly.
Pair Corralation between Destination and Barnes Noble
Given the investment horizon of 90 days Destination XL Group is expected to under-perform the Barnes Noble. But the stock apears to be less risky and, when comparing its historical volatility, Destination XL Group is 5.38 times less risky than Barnes Noble. The stock trades about -0.04 of its potential returns per unit of risk. The Barnes Noble Education is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,151 in Barnes Noble Education on October 20, 2024 and sell it today you would lose (8,035) from holding Barnes Noble Education or give up 87.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Destination XL Group vs. Barnes Noble Education
Performance |
| Timeline |
| Destination XL Group |
| Barnes Noble Education |
Destination and Barnes Noble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Destination and Barnes Noble
The main advantage of trading using opposite Destination and Barnes Noble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Destination position performs unexpectedly, Barnes Noble 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 Barnes Noble will offset losses from the drop in Barnes Noble's long position.| Destination vs. Cato Corporation | Destination vs. Zumiez Inc | Destination vs. Tillys Inc | Destination vs. Duluth Holdings |
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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 Stocks Directory module to find actively traded stocks across global markets.
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