Correlation Between Destination and Duluth Holdings

Can any of the company-specific risk be diversified away by investing in both Destination and Duluth Holdings 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 Duluth Holdings 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 Duluth Holdings, you can compare the effects of market volatilities on Destination and Duluth Holdings 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 Duluth Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destination and Duluth Holdings.

Diversification Opportunities for Destination and Duluth Holdings

0.39

Correlation Coefficient

Destination  Duluth Holdings

Weak diversification

The 3 months correlation between Destination and Duluth is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Duluth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duluth Holdings 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 Duluth Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duluth Holdings has no effect on the direction of Destination i.e., Destination and Duluth Holdings go up and down completely randomly.

Pair Corralation between Destination and Duluth Holdings

Given the investment horizon of 90 days Destination XL Group is expected to generate 1.05 times more return on investment than Duluth Holdings. However, Destination is 1.05 times more volatile than Duluth Holdings. It trades about -0.01 of its potential returns per unit of risk. Duluth Holdings is currently generating about -0.05 per unit of risk. If you would invest  425.00  in Destination XL Group on January 19, 2024 and sell it today you would lose (104.00) from holding Destination XL Group or give up 24.47% of portfolio value over 90 days.

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

Destination XL Group  vs.  Duluth Holdings

Destination XL Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destination XL Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Duluth Holdings

Risk-Adjusted Performance

0 of 100

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 weak 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.

Pair Trading with Destination and Duluth Holdings

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

The idea behind Destination XL Group and Duluth Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.