Correlation Between Powerbridge Technologies and Digital Brands

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

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

Diversification Opportunities for Powerbridge Technologies and Digital Brands

0.79

Correlation Coefficient

Powerbridge Technologies  Digital Brands

Poor diversification

The 3 months correlation between Powerbridge and Digital is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Powerbridge Technologies Co and Digital Brands Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Brands Group and Powerbridge Technologies 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 Powerbridge Technologies Co are associated (or correlated) with Digital Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Brands Group has no effect on the direction of Powerbridge Technologies i.e., Powerbridge Technologies and Digital Brands go up and down completely randomly.

Pair Corralation between Powerbridge Technologies and Digital Brands

Given the investment horizon of 90 days Powerbridge Technologies Co is expected to under-perform the Digital Brands. But the stock apears to be less risky and, when comparing its historical volatility, Powerbridge Technologies Co is 1.33 times less risky than Digital Brands. The stock trades about -0.47 of its potential returns per unit of risk. The Digital Brands Group is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  89,125  in Digital Brands Group on October 3, 2024 and sell it today you would lose (89,004) from holding Digital Brands Group or give up 99.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	7.67%
Values	Daily Returns

Powerbridge Technologies Co  vs.  Digital Brands Group

Powerbridge Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powerbridge Technologies Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Powerbridge Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Digital Brands Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Brands Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Powerbridge Technologies and Digital Brands

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

The idea behind Powerbridge Technologies Co and Digital Brands 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.