Correlation Between Designer Brands and Asics Corp

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

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

Diversification Opportunities for Designer Brands and Asics Corp

0.23

Correlation Coefficient

Designer Brands  Asics Corp

Modest diversification

The 3 months correlation between Designer and Asics is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Asics Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asics Corp ADR and Designer 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 Designer Brands are associated (or correlated) with Asics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asics Corp ADR has no effect on the direction of Designer Brands i.e., Designer Brands and Asics Corp go up and down completely randomly.

Pair Corralation between Designer Brands and Asics Corp

Considering the 90-day investment horizon Designer Brands is expected to generate 1.42 times less return on investment than Asics Corp. In addition to that, Designer Brands is 2.31 times more volatile than Asics Corp ADR. It trades about 0.06 of its total potential returns per unit of risk. Asics Corp ADR is currently generating about 0.21 per unit of volatility. If you would invest  1,856  in Asics Corp ADR on November 20, 2024 and sell it today you would earn a total of  494.00  from holding Asics Corp ADR or generate 26.62% return on investment over 90 days.

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

Designer Brands  vs.  Asics Corp ADR

Designer Brands

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Designer Brands are ranked lower than 5 (%) 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.

Asics Corp ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asics Corp ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Asics Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Designer Brands and Asics Corp

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

The idea behind Designer Brands and Asics Corp ADR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.