Correlation Between Buckle and Designer Brands

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

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

Diversification Opportunities for Buckle and Designer Brands

-0.05
  Correlation Coefficient
Buckle Inc
Designer Brands

Good diversification

The 3 months correlation between Buckle and Designer is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Buckle Inc and Designer Brands in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and Buckle 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 Buckle Inc are associated (or correlated) with Designer Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Designer Brands has no effect on the direction of Buckle i.e., Buckle and Designer Brands go up and down completely randomly.

Pair Corralation between Buckle and Designer Brands

Considering the 90-day investment horizon Buckle is expected to generate 1.59 times less return on investment than Designer Brands. But when comparing it to its historical volatility, Buckle Inc is 1.29 times less risky than Designer Brands. It trades about 0.05 of its potential returns per unit of risk. Designer Brands is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,220  in Designer Brands on May 1, 2021 and sell it today you would earn a total of  237.00  from holding Designer Brands or generate 19.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Buckle Inc  vs.  Designer Brands

 Performance (%) 
      Timeline 
Buckle Inc 
 Buckle Performance
0 of 100
Over the last 90 days Buckle Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Buckle is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Buckle Price Channel

Designer Brands 
 Designer Performance
0 of 100
Over the last 90 days Designer Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in August 2021. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Designer Price Channel

Buckle and Designer Brands Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Buckle and Designer Brands

The main advantage of trading using opposite Buckle and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buckle position performs unexpectedly, Designer 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 Designer Brands will offset losses from the drop in Designer Brands' long position.
The idea behind Buckle Inc and Designer Brands 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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