Correlation Between Destination and Reitmans (Canada)

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

Diversification Opportunities for Destination and Reitmans (Canada)

0.3

Correlation Coefficient

Destination  Reitmans (Canada)

Weak diversification

The 3 months correlation between Destination and Reitmans is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans (Canada) 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 Reitmans (Canada). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans (Canada) has no effect on the direction of Destination i.e., Destination and Reitmans (Canada) go up and down completely randomly.

Pair Corralation between Destination and Reitmans (Canada)

Given the investment horizon of 90 days Destination XL Group is expected to under-perform the Reitmans (Canada). In addition to that, Destination is 1.73 times more volatile than Reitmans Limited. It trades about -0.18 of its total potential returns per unit of risk. Reitmans Limited is currently generating about -0.03 per unit of volatility. If you would invest  170.00  in Reitmans Limited on December 22, 2024 and sell it today you would lose (7.00) from holding Reitmans Limited or give up 4.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Destination XL Group  vs.  Reitmans Limited

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.

Reitmans (Canada)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Reitmans (Canada) is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Destination and Reitmans (Canada)

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

The idea behind Destination XL Group 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.