Correlation Between FHC Holdings and Designer Brands

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

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

Diversification Opportunities for FHC Holdings and Designer Brands

0.0

Correlation Coefficient

FHC Holdings  Designer Brands

Pay attention - limited upside

The 3 months correlation between FHC and Designer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FHC Holdings and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and FHC 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 FHC Holdings 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 FHC Holdings i.e., FHC Holdings and Designer Brands go up and down completely randomly.

Pair Corralation between FHC Holdings and Designer Brands

If you would invest (100.00) in FHC Holdings on January 26, 2024 and sell it today you would earn a total of  100.00  from holding FHC Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FHC Holdings  vs.  Designer Brands

FHC Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FHC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, FHC Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Designer Brands

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Designer Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental drivers, Designer Brands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FHC Holdings and Designer Brands

The main advantage of trading using opposite FHC Holdings and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FHC Holdings 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 FHC Holdings 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.