Correlation Between Destination and Build A
Can any of the company-specific risk be diversified away by investing in both Destination and Build A 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 Destination and Build A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Destination XL Group and Build A Bear Workshop, you can compare the effects of market volatilities on Destination and Build A 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 Destination with a short position of Build A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destination and Build A.
Diversification Opportunities for Destination and Build A
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Destination and Build is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Build A Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build A Bear and Destination 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 Destination XL Group are associated (or correlated) with Build A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build A Bear has no effect on the direction of Destination i.e., Destination and Build A go up and down completely randomly.
Pair Corralation between Destination and Build A
Given the investment horizon of 90 days Destination XL Group is expected to under-perform the Build A. But the stock apears to be less risky and, when comparing its historical volatility, Destination XL Group is 1.07 times less risky than Build A. The stock trades about -0.17 of its potential returns per unit of risk. The Build A Bear Workshop is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,964 in Build A Bear Workshop on January 30, 2024 and sell it today you would earn a total of 15.00 from holding Build A Bear Workshop or generate 0.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Destination XL Group vs. Build A Bear Workshop
Performance |
Timeline |
Destination XL Group |
Build A Bear |
Destination and Build A Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Destination and Build A
The main advantage of trading using opposite Destination and Build A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Destination position performs unexpectedly, Build A 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 Build A will offset losses from the drop in Build A's long position.Destination vs. Cato Corporation | Destination vs. Zumiez Inc | Destination vs. Tillys Inc | Destination vs. Duluth Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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