Correlation Between Digimarc and Aritzia

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

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

Diversification Opportunities for Digimarc and Aritzia

0.45

Correlation Coefficient

Digimarc  Aritzia

Very weak diversification

The 3 months correlation between Digimarc and Aritzia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and Digimarc 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 Digimarc are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Digimarc i.e., Digimarc and Aritzia go up and down completely randomly.

Pair Corralation between Digimarc and Aritzia

Given the investment horizon of 90 days Digimarc is expected to generate 0.94 times more return on investment than Aritzia. However, Digimarc is 1.07 times less risky than Aritzia. It trades about 0.38 of its potential returns per unit of risk. Aritzia is currently generating about 0.18 per unit of risk. If you would invest  2,398  in Digimarc on March 12, 2024 and sell it today you would earn a total of  415.00  from holding Digimarc or generate 17.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Digimarc  vs.  Aritzia

Digimarc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digimarc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aritzia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aritzia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Digimarc and Aritzia

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

The idea behind Digimarc and Aritzia 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.