Correlation Between Brilliant Earth and Lands End

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Can any of the company-specific risk be diversified away by investing in both Brilliant Earth and Lands End 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 Brilliant Earth and Lands End into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Earth Group and Lands End, you can compare the effects of market volatilities on Brilliant Earth and Lands End 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 Brilliant Earth with a short position of Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Earth and Lands End.

Diversification Opportunities for Brilliant Earth and Lands End

BrilliantLandsDiversified AwayBrilliantLandsDiversified Away100%
-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Brilliant and Lands is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and Lands End go up and down completely randomly.

Pair Corralation between Brilliant Earth and Lands End

Given the investment horizon of 90 days Brilliant Earth Group is expected to generate 0.99 times more return on investment than Lands End. However, Brilliant Earth Group is 1.01 times less risky than Lands End. It trades about 0.02 of its potential returns per unit of risk. Lands End is currently generating about -0.06 per unit of risk. If you would invest  190.00  in Brilliant Earth Group on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Brilliant Earth Group or generate 1.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Brilliant Earth Group  vs.  Lands End

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15BRLT LE
       Timeline  
Brilliant Earth Group 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Brilliant Earth Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Brilliant Earth is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.61.71.81.922.12.2
Lands End 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lands End has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1314151617181920

Brilliant Earth and Lands End Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.69-8.76-5.82-2.890.02.865.838.7911.7514.72 0.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15BRLT LE
       Returns  

Pair Trading with Brilliant Earth and Lands End

The main advantage of trading using opposite Brilliant Earth and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Earth position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End's long position.
The idea behind Brilliant Earth Group and Lands End 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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