Correlation Between Duluth Holdings and Reitmans

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

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

Diversification Opportunities for Duluth Holdings and Reitmans

0.69

Correlation Coefficient

Duluth Holdings  Reitmans

Poor diversification

The 3 months correlation between Duluth and Reitmans is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Duluth Holdings and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited and Duluth Holdings 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 Duluth Holdings are associated (or correlated) with Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Duluth Holdings i.e., Duluth Holdings and Reitmans go up and down completely randomly.

Pair Corralation between Duluth Holdings and Reitmans

Given the investment horizon of 90 days Duluth Holdings is expected to under-perform the Reitmans. In addition to that, Duluth Holdings is 1.53 times more volatile than Reitmans Limited. It trades about -0.05 of its total potential returns per unit of risk. Reitmans Limited is currently generating about -0.02 per unit of volatility. If you would invest  200.00  in Reitmans Limited on September 28, 2024 and sell it today you would lose (30.00) from holding Reitmans Limited or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.63%
Values	Daily Returns

Duluth Holdings  vs.  Reitmans Limited

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Duluth Holdings and Reitmans

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

The idea behind Duluth Holdings and Reitmans Limited 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 Stocks Directory module to find actively traded stocks across global markets.