Correlation Between Relx PLC and Duluth Holdings
Can any of the company-specific risk be diversified away by investing in both Relx PLC and Duluth Holdings 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 Relx PLC and Duluth Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Relx PLC ADR and Duluth Holdings, you can compare the effects of market volatilities on Relx PLC and Duluth Holdings 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 Relx PLC with a short position of Duluth Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Relx PLC and Duluth Holdings.
Diversification Opportunities for Relx PLC and Duluth Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Relx and Duluth is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Relx PLC ADR and Duluth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duluth Holdings and Relx PLC 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 Relx PLC ADR are associated (or correlated) with Duluth Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duluth Holdings has no effect on the direction of Relx PLC i.e., Relx PLC and Duluth Holdings go up and down completely randomly.
Pair Corralation between Relx PLC and Duluth Holdings
Given the investment horizon of 90 days Relx PLC ADR is expected to generate 0.38 times more return on investment than Duluth Holdings. However, Relx PLC ADR is 2.61 times less risky than Duluth Holdings. It trades about 0.11 of its potential returns per unit of risk. Duluth Holdings is currently generating about -0.02 per unit of risk. If you would invest 2,771 in Relx PLC ADR on September 3, 2024 and sell it today you would earn a total of 1,962 from holding Relx PLC ADR or generate 70.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Relx PLC ADR vs. Duluth Holdings
Performance |
| Timeline |
| Relx PLC ADR |
| Duluth Holdings |
Relx PLC and Duluth Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Relx PLC and Duluth Holdings
The main advantage of trading using opposite Relx PLC and Duluth Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relx PLC position performs unexpectedly, Duluth Holdings 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 Duluth Holdings will offset losses from the drop in Duluth Holdings' long position.| Relx PLC vs. Maximus | Relx PLC vs. CBIZ Inc | Relx PLC vs. First Advantage Corp | Relx PLC vs. Network 1 Technologies |
| Duluth Holdings vs. Zumiez Inc | Duluth Holdings vs. JJill Inc | Duluth Holdings vs. Shoe Carnival | Duluth Holdings vs. Cato Corporation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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