Correlation Between Dr Martens and Phoenix Footwear

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

By analyzing existing cross correlation between Dr Martens plc and Phoenix Footwear Group, you can compare the effects of market volatilities on Dr Martens and Phoenix Footwear 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 Dr Martens with a short position of Phoenix Footwear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dr Martens and Phoenix Footwear.

Diversification Opportunities for Dr Martens and Phoenix Footwear

0.47

Correlation Coefficient

Dr Martens  Phoenix Footwear

Very weak diversification

The 3 months correlation between DOCMF and Phoenix is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dr Martens plc and Phoenix Footwear Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Footwear and Dr Martens 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 Dr Martens plc are associated (or correlated) with Phoenix Footwear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Footwear has no effect on the direction of Dr Martens i.e., Dr Martens and Phoenix Footwear go up and down completely randomly.

Pair Corralation between Dr Martens and Phoenix Footwear

If you would invest  72.00  in Dr Martens plc on September 1, 2024 and sell it today you would earn a total of  4.00  from holding Dr Martens plc or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Dr Martens plc  vs.  Phoenix Footwear Group

Dr Martens plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dr Martens plc 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 primary indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Phoenix Footwear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix Footwear Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Phoenix Footwear is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dr Martens and Phoenix Footwear

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

The idea behind Dr Martens plc and Phoenix Footwear Group 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.