Correlation Between Designer Brands and Buckle

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

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

Diversification Opportunities for Designer Brands and Buckle

-0.05
  Correlation Coefficient
Designer Brands
Buckle Inc

Good diversification

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

Pair Corralation between Designer Brands and Buckle

Considering the 90-day investment horizon Designer Brands is expected to generate 6.55 times more return on investment than Buckle. However, Designer Brands is 6.55 times more volatile than Buckle Inc. It trades about 0.07 of its potential returns per unit of risk. Buckle Inc is currently generating about 0.06 per unit of risk. If you would invest  1,626  in Designer Brands on May 1, 2021 and sell it today you would lose (169.00)  from holding Designer Brands or give up 10.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.13%
ValuesDaily Returns

Designer Brands  vs.  Buckle Inc

 Performance (%) 
      Timeline 
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 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 and Buckle Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Designer Brands and Buckle

The main advantage of trading using opposite Designer Brands and Buckle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, Buckle 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 Buckle will offset losses from the drop in Buckle's long position.
The idea behind Designer Brands and Buckle Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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