Correlation Between Destination and Ralph Lauren

Can any of the company-specific risk be diversified away by investing in both Destination and Ralph Lauren 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 Ralph Lauren 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 Ralph Lauren Corp, you can compare the effects of market volatilities on Destination and Ralph Lauren 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 Ralph Lauren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destination and Ralph Lauren.

Diversification Opportunities for Destination and Ralph Lauren

0.25

Correlation Coefficient

Destination  Ralph Lauren

Modest diversification

The 3 months correlation between Destination and Ralph is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Ralph Lauren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren Corp 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 Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren Corp has no effect on the direction of Destination i.e., Destination and Ralph Lauren go up and down completely randomly.

Pair Corralation between Destination and Ralph Lauren

Given the investment horizon of 90 days Destination XL Group is expected to under-perform the Ralph Lauren. In addition to that, Destination is 1.35 times more volatile than Ralph Lauren Corp. It trades about -0.16 of its total potential returns per unit of risk. Ralph Lauren Corp is currently generating about -0.01 per unit of volatility. If you would invest  22,959  in Ralph Lauren Corp on December 21, 2024 and sell it today you would lose (556.00) from holding Ralph Lauren Corp or give up 2.42% of portfolio value over 90 days.

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

Destination XL Group  vs.  Ralph Lauren Corp

Destination XL Group

Risk-Adjusted Performance

Very Weak

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

Ralph Lauren Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ralph Lauren Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Ralph Lauren is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Destination and Ralph Lauren

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

The idea behind Destination XL Group and Ralph Lauren Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.