Correlation Between D MARKET and Solo Brands
Can any of the company-specific risk be diversified away by investing in both D MARKET and Solo Brands 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 D MARKET and Solo Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between D MARKET Electronic Services and Solo Brands, you can compare the effects of market volatilities on D MARKET and Solo Brands 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 D MARKET with a short position of Solo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of D MARKET and Solo Brands.
Diversification Opportunities for D MARKET and Solo Brands
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HEPS and Solo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding D MARKET Electronic Services and Solo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solo Brands and D MARKET 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 D MARKET Electronic Services are associated (or correlated) with Solo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solo Brands has no effect on the direction of D MARKET i.e., D MARKET and Solo Brands go up and down completely randomly.
Pair Corralation between D MARKET and Solo Brands
Given the investment horizon of 90 days D MARKET Electronic Services is expected to under-perform the Solo Brands. But the stock apears to be less risky and, when comparing its historical volatility, D MARKET Electronic Services is 2.35 times less risky than Solo Brands. The stock trades about -0.34 of its potential returns per unit of risk. The Solo Brands is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Solo Brands on August 28, 2024 and sell it today you would lose (2.00) from holding Solo Brands or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
D MARKET Electronic Services vs. Solo Brands
Performance |
| Timeline |
| D MARKET Electronic |
| Solo Brands |
D MARKET and Solo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with D MARKET and Solo Brands
The main advantage of trading using opposite D MARKET and Solo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if D MARKET position performs unexpectedly, Solo Brands 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 Solo Brands will offset losses from the drop in Solo Brands' long position.The idea behind D MARKET Electronic Services and Solo Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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