Correlation Between Destination and Jeffs Brands

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

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

Diversification Opportunities for Destination and Jeffs Brands

-0.7

Correlation Coefficient

Destination  Jeffs Brands

Excellent diversification

The 3 months correlation between Destination and Jeffs is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Jeffs Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeffs Brands and Destination 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 Destination XL Group are associated (or correlated) with Jeffs Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeffs Brands has no effect on the direction of Destination i.e., Destination and Jeffs Brands go up and down completely randomly.

Pair Corralation between Destination and Jeffs Brands

Given the investment horizon of 90 days Destination XL Group is expected to generate 0.74 times more return on investment than Jeffs Brands. However, Destination XL Group is 1.36 times less risky than Jeffs Brands. It trades about 0.17 of its potential returns per unit of risk. Jeffs Brands is currently generating about -0.06 per unit of risk. If you would invest  228.00  in Destination XL Group on September 25, 2024 and sell it today you would earn a total of  51.00  from holding Destination XL Group or generate 22.37% return on investment over 90 days.

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

Destination XL Group  vs.  Jeffs Brands

Destination XL Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Destination XL Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Destination is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Jeffs Brands

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeffs Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Jeffs Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Destination and Jeffs Brands

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

The idea behind Destination XL Group and Jeffs Brands 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.