Correlation Between Kontoor Brands and Digital Brands
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands and Digital 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 Kontoor Brands and Digital Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and Digital Brands Group, you can compare the effects of market volatilities on Kontoor Brands and Digital 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 Kontoor Brands with a short position of Digital Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Digital Brands.
Diversification Opportunities for Kontoor Brands and Digital Brands
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kontoor and Digital is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Digital Brands Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Brands Group and Kontoor 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 Kontoor Brands are associated (or correlated) with Digital Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Brands Group has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and Digital Brands go up and down completely randomly.
Pair Corralation between Kontoor Brands and Digital Brands
Considering the 90-day investment horizon Kontoor Brands is expected to generate 0.11 times more return on investment than Digital Brands. However, Kontoor Brands is 9.45 times less risky than Digital Brands. It trades about -0.24 of its potential returns per unit of risk. Digital Brands Group is currently generating about -0.42 per unit of risk. If you would invest 9,322 in Kontoor Brands on September 24, 2024 and sell it today you would lose (665.00) from holding Kontoor Brands or give up 7.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kontoor Brands vs. Digital Brands Group
Performance |
| Timeline |
| Kontoor Brands |
| Digital Brands Group |
Kontoor Brands and Digital Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and Digital Brands
The main advantage of trading using opposite Kontoor Brands and Digital Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands position performs unexpectedly, Digital 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 Digital Brands will offset losses from the drop in Digital Brands' long position.| Kontoor Brands vs. Amer Sports, | Kontoor Brands vs. Brunswick | Kontoor Brands vs. BRP Inc | Kontoor Brands vs. Vision Marine Technologies |
| Digital Brands vs. Burlington Stores | Digital Brands vs. Urban Outfitters | Digital Brands vs. American Eagle Outfitters | Digital Brands vs. Childrens Place |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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