Correlation Between PHINIA and Designer Brands

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

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

Diversification Opportunities for PHINIA and Designer Brands

0.69

Correlation Coefficient

PHINIA  Designer Brands

Poor diversification

The 3 months correlation between PHINIA and Designer is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PHINIA Inc and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and PHINIA 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 PHINIA Inc 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 PHINIA i.e., PHINIA and Designer Brands go up and down completely randomly.

Pair Corralation between PHINIA and Designer Brands

Given the investment horizon of 90 days PHINIA Inc is expected to generate 0.55 times more return on investment than Designer Brands. However, PHINIA Inc is 1.83 times less risky than Designer Brands. It trades about -0.03 of its potential returns per unit of risk. Designer Brands is currently generating about -0.13 per unit of risk. If you would invest  4,684  in PHINIA Inc on December 20, 2024 and sell it today you would lose (274.00) from holding PHINIA Inc or give up 5.85% of portfolio value over 90 days.

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

PHINIA Inc  vs.  Designer Brands

PHINIA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PHINIA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, PHINIA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Designer Brands

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PHINIA and Designer Brands

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