Correlation Between Designer Brands and Banc Of

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Can any of the company-specific risk be diversified away by investing in both Designer Brands and Banc Of 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 Banc Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Banc of California, you can compare the effects of market volatilities on Designer Brands and Banc Of 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 Banc Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Banc Of.

Diversification Opportunities for Designer Brands and Banc Of

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Designer and Banc is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Banc of California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banc of California 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 Banc Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banc of California has no effect on the direction of Designer Brands i.e., Designer Brands and Banc Of go up and down completely randomly.

Pair Corralation between Designer Brands and Banc Of

Considering the 90-day investment horizon Designer Brands is expected to under-perform the Banc Of. In addition to that, Designer Brands is 7.44 times more volatile than Banc of California. It trades about -0.08 of its total potential returns per unit of risk. Banc of California is currently generating about 0.04 per unit of volatility. If you would invest  2,465  in Banc of California on October 8, 2024 and sell it today you would earn a total of  9.00  from holding Banc of California or generate 0.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Designer Brands  vs.  Banc of California

 Performance 
       Timeline  
Designer Brands 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Banc of California 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Banc of California are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Banc Of may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Designer Brands and Banc Of Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Designer Brands and Banc Of

The main advantage of trading using opposite Designer Brands and Banc Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, Banc Of 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 Banc Of will offset losses from the drop in Banc Of's long position.
The idea behind Designer Brands and Banc of California 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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