Correlation Between PULSION Medical and Designer Brands

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

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

Diversification Opportunities for PULSION Medical and Designer Brands

-0.12

Correlation Coefficient

PULSION Medical  Designer Brands

Good diversification

The 3 months correlation between PULSION and Designer is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PULSION Medical Systems and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and PULSION Medical 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 PULSION Medical Systems 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 PULSION Medical i.e., PULSION Medical and Designer Brands go up and down completely randomly.

Pair Corralation between PULSION Medical and Designer Brands

Assuming the 90 days trading horizon PULSION Medical is expected to generate 74.08 times less return on investment than Designer Brands. But when comparing it to its historical volatility, PULSION Medical Systems is 9.88 times less risky than Designer Brands. It trades about 0.01 of its potential returns per unit of risk. Designer Brands is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  545.00  in Designer Brands on October 8, 2024 and sell it today you would lose (25.00) from holding Designer Brands or give up 4.59% of portfolio value over 90 days.

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

PULSION Medical Systems  vs.  Designer Brands

PULSION Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

Designer Brands

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Designer Brands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Designer Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PULSION Medical and Designer Brands

The main advantage of trading using opposite PULSION Medical and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PULSION Medical 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 PULSION Medical Systems 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.