Correlation Between Childrens Place and Digital Brands

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

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

Diversification Opportunities for Childrens Place and Digital Brands

0.0

Correlation Coefficient

Childrens Place  Digital Brands

Pay attention - limited upside

The 3 months correlation between Childrens and Digital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place 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 Childrens Place 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 Childrens Place 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 Childrens Place i.e., Childrens Place and Digital Brands go up and down completely randomly.

Pair Corralation between Childrens Place and Digital Brands

If you would invest (100.00) in Digital Brands Group on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Digital Brands Group or generate -100.0% return on investment over 90 days.

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

Childrens Place  vs.  Digital Brands Group

Childrens Place

Risk-Adjusted Performance

Very Weak

Over the last 90 days Childrens Place has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Digital Brands Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Brands Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Digital Brands is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Childrens Place and Digital Brands

The main advantage of trading using opposite Childrens Place and Digital Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place 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 Childrens Place 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.