Correlation Between Gaucho Group and Digital Brands
Can any of the company-specific risk be diversified away by investing in both Gaucho Group 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 Gaucho Group and Digital Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaucho Group Holdings and Digital Brands Group, you can compare the effects of market volatilities on Gaucho Group 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 Gaucho Group with a short position of Digital Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaucho Group and Digital Brands.
Diversification Opportunities for Gaucho Group and Digital Brands
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gaucho and Digital is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gaucho Group Holdings 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 Gaucho Group 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 Gaucho Group Holdings 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 Gaucho Group i.e., Gaucho Group and Digital Brands go up and down completely randomly.
Pair Corralation between Gaucho Group and Digital Brands
Given the investment horizon of 90 days Gaucho Group Holdings is expected to under-perform the Digital Brands. But the stock apears to be less risky and, when comparing its historical volatility, Gaucho Group Holdings is 1.64 times less risky than Digital Brands. The stock trades about -0.1 of its potential returns per unit of risk. The Digital Brands Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,850 in Digital Brands Group on August 27, 2024 and sell it today you would lose (1,838) from holding Digital Brands Group or give up 99.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaucho Group Holdings vs. Digital Brands Group
Performance |
| Timeline |
| Gaucho Group Holdings |
| Digital Brands Group |
Gaucho Group and Digital Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaucho Group and Digital Brands
The main advantage of trading using opposite Gaucho Group and Digital Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaucho Group 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.| Gaucho Group vs. Investcorp Credit Management | Gaucho Group vs. Medalist Diversified Reit | Gaucho Group vs. Aquagold International | Gaucho Group vs. Morningstar Unconstrained Allocation |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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