Correlation Between L Brands and Duluth Holdings

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

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

Diversification Opportunities for L Brands and Duluth Holdings

0.0

Correlation Coefficient

L Brands  Duluth Holdings

Pay attention - limited upside

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

Pair Corralation between L Brands and Duluth Holdings

If you would invest (100.00) in L Brands on January 20, 2024 and sell it today you would earn a total of  100.00  from holding L Brands 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

L Brands  vs.  Duluth Holdings

L Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, L Brands is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with L Brands and Duluth Holdings

The main advantage of trading using opposite L Brands and Duluth Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Brands 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 L Brands 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.