Correlation Between Duluth Holdings and Chicos FAS

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

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

Diversification Opportunities for Duluth Holdings and Chicos FAS

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Correlation Coefficient

Duluth Holdings  Chicos FAS

Pay attention - limited upside

The 3 months correlation between Duluth and Chicos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Duluth Holdings and Chicos FAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicos FAS and Duluth Holdings 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 Duluth Holdings are associated (or correlated) with Chicos FAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicos FAS has no effect on the direction of Duluth Holdings i.e., Duluth Holdings and Chicos FAS go up and down completely randomly.

Pair Corralation between Duluth Holdings and Chicos FAS

Given the investment horizon of 90 days Duluth Holdings is expected to under-perform the Chicos FAS. But the stock apears to be less risky and, when comparing its historical volatility, Duluth Holdings is 1.61 times less risky than Chicos FAS. The stock trades about -0.06 of its potential returns per unit of risk. The Chicos FAS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  508.00  in Chicos FAS on January 26, 2024 and sell it today you would earn a total of  251.00  from holding Chicos FAS or generate 49.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	84.65%
Values	Daily Returns

Duluth Holdings  vs.  Chicos FAS

Duluth Holdings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Duluth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Chicos FAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicos FAS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Chicos FAS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Duluth Holdings and Chicos FAS

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

The idea behind Duluth Holdings and Chicos FAS 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.