Correlation Between Boston Omaha and Designer Brands

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

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

Diversification Opportunities for Boston Omaha and Designer Brands

-0.21

Correlation Coefficient

Boston Omaha  Designer Brands

Very good diversification

The 3 months correlation between Boston and Designer is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and Boston Omaha 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 Boston Omaha Corp 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 Boston Omaha i.e., Boston Omaha and Designer Brands go up and down completely randomly.

Pair Corralation between Boston Omaha and Designer Brands

Considering the 90-day investment horizon Boston Omaha Corp is expected to under-perform the Designer Brands. But the stock apears to be less risky and, when comparing its historical volatility, Boston Omaha Corp is 2.13 times less risky than Designer Brands. The stock trades about -0.22 of its potential returns per unit of risk. The Designer Brands is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  579.00  in Designer Brands on October 10, 2024 and sell it today you would lose (32.00) from holding Designer Brands or give up 5.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Boston Omaha Corp  vs.  Designer Brands

Boston Omaha Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Omaha Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Boston Omaha is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Designer Brands

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Boston Omaha and Designer Brands

The main advantage of trading using opposite Boston Omaha and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Omaha 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 Boston Omaha Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.