Correlation Between Movado and Designer Brands

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

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

Diversification Opportunities for Movado and Designer Brands

-0.1

Correlation Coefficient

Movado  Designer Brands

Good diversification

The 3 months correlation between Movado and Designer is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and Movado 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 Movado Group 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 Movado i.e., Movado and Designer Brands go up and down completely randomly.

Pair Corralation between Movado and Designer Brands

Considering the 90-day investment horizon Movado is expected to generate 4.09 times less return on investment than Designer Brands. But when comparing it to its historical volatility, Movado Group is 3.75 times less risky than Designer Brands. It trades about 0.14 of its potential returns per unit of risk. Designer Brands is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  485.00  in Designer Brands on September 22, 2024 and sell it today you would earn a total of  79.00  from holding Designer Brands or generate 16.29% return on investment over 90 days.

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

Movado Group  vs.  Designer Brands

Movado Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Movado Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Movado is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 latest inconsistent performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Movado and Designer Brands

The main advantage of trading using opposite Movado and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movado 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 Movado Group 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.