Correlation Between SERI INDUSTRIAL and Designer Brands

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

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

Diversification Opportunities for SERI INDUSTRIAL and Designer Brands

-0.2

Correlation Coefficient

SERI INDUSTRIAL  Designer Brands

Good diversification

The 3 months correlation between SERI and Designer is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and Designer Brands go up and down completely randomly.

Pair Corralation between SERI INDUSTRIAL and Designer Brands

If you would invest  278.00  in SERI INDUSTRIAL EO on October 10, 2024 and sell it today you would lose (36.00) from holding SERI INDUSTRIAL EO or give up 12.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SERI INDUSTRIAL EO  vs.  Designer Brands

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Designer Brands

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Designer Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Designer Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SERI INDUSTRIAL and Designer Brands

The main advantage of trading using opposite SERI INDUSTRIAL and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.