Correlation Between Entegris and Designer Brands

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

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

Diversification Opportunities for Entegris and Designer Brands

0.5

Correlation Coefficient

Entegris  Designer Brands

Very weak diversification

The 3 months correlation between Entegris and Designer is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and Entegris 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 Entegris are associated (or correlated) with Designer Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Designer Brands has no effect on the direction of Entegris i.e., Entegris and Designer Brands go up and down completely randomly.

Pair Corralation between Entegris and Designer Brands

Given the investment horizon of 90 days Entegris is expected to under-perform the Designer Brands. But the stock apears to be less risky and, when comparing its historical volatility, Entegris is 1.49 times less risky than Designer Brands. The stock trades about -0.18 of its potential returns per unit of risk. The Designer Brands is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  579.00  in Designer Brands on October 8, 2024 and sell it today you would lose (39.00) from holding Designer Brands or give up 6.74% of portfolio value over 90 days.

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

Entegris  vs.  Designer Brands

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Designer Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Designer Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Designer Brands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Entegris and Designer Brands

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

The idea behind Entegris and Designer 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 Global Correlations module to find global opportunities by holding instruments from different markets.