Correlation Between Gap, and Destination
Can any of the company-specific risk be diversified away by investing in both Gap, and Destination 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 Gap, and Destination into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and Destination XL Group, you can compare the effects of market volatilities on Gap, and Destination 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 Gap, with a short position of Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Destination.
Diversification Opportunities for Gap, and Destination
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gap, and Destination is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Destination XL Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destination XL Group and Gap, 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 The Gap, are associated (or correlated) with Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destination XL Group has no effect on the direction of Gap, i.e., Gap, and Destination go up and down completely randomly.
Pair Corralation between Gap, and Destination
Considering the 90-day investment horizon The Gap, is expected to generate 0.66 times more return on investment than Destination. However, The Gap, is 1.51 times less risky than Destination. It trades about 0.11 of its potential returns per unit of risk. Destination XL Group is currently generating about 0.01 per unit of risk. If you would invest 2,053 in The Gap, on October 8, 2024 and sell it today you would earn a total of 369.00 from holding The Gap, or generate 17.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Gap, vs. Destination XL Group
Performance |
Timeline |
Gap, |
Destination XL Group |
Gap, and Destination Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gap, and Destination
The main advantage of trading using opposite Gap, and Destination positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, position performs unexpectedly, Destination 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 Destination will offset losses from the drop in Destination's long position.The idea behind The Gap, and Destination XL 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.Destination vs. Cato Corporation | Destination vs. Zumiez Inc | Destination vs. Tillys Inc | Destination vs. Duluth Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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