Correlation Between Digital Brands and Topsports International

Can any of the company-specific risk be diversified away by investing in both Digital Brands and Topsports International 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 Digital Brands and Topsports International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Digital Brands Group, and Topsports International Holdings, you can compare the effects of market volatilities on Digital Brands and Topsports International 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 Digital Brands with a short position of Topsports International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Brands and Topsports International.

Diversification Opportunities for Digital Brands and Topsports International

0.59

Correlation Coefficient

Digital Brands  Topsports International

Very weak diversification

The 3 months correlation between Digital and Topsports is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Digital Brands Group, and Topsports International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topsports International and Digital 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 Digital Brands Group, are associated (or correlated) with Topsports International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topsports International has no effect on the direction of Digital Brands i.e., Digital Brands and Topsports International go up and down completely randomly.

Pair Corralation between Digital Brands and Topsports International

Given the investment horizon of 90 days Digital Brands Group, is expected to generate 4.89 times more return on investment than Topsports International. However, Digital Brands is 4.89 times more volatile than Topsports International Holdings. It trades about 0.0 of its potential returns per unit of risk. Topsports International Holdings is currently generating about -0.07 per unit of risk. If you would invest  1,330  in Digital Brands Group, on July 21, 2025 and sell it today you would lose (503.00) from holding Digital Brands Group, or give up 37.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Digital Brands Group,  vs.  Topsports International Holdin

Digital Brands Group,

Risk-Adjusted Performance

Weakest

Over the last 90 days Digital Brands Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Digital Brands is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Topsports International

Risk-Adjusted Performance

Weakest

Over the last 90 days Topsports International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Digital Brands and Topsports International

The main advantage of trading using opposite Digital Brands and Topsports International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Brands position performs unexpectedly, Topsports International 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 Topsports International will offset losses from the drop in Topsports International's long position.

The idea behind Digital Brands Group, and Topsports International Holdings 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.