Correlation Between Digital Brands and PVH Corp
Can any of the company-specific risk be diversified away by investing in both Digital Brands and PVH Corp 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 Digital Brands and PVH Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Brands Group and PVH Corp, you can compare the effects of market volatilities on Digital Brands and PVH Corp 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 Digital Brands with a short position of PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Brands and PVH Corp.
Diversification Opportunities for Digital Brands and PVH Corp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digital and PVH is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Digital Brands Group and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp and Digital Brands 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 Digital Brands Group are associated (or correlated) with PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Digital Brands i.e., Digital Brands and PVH Corp go up and down completely randomly.
Pair Corralation between Digital Brands and PVH Corp
Given the investment horizon of 90 days Digital Brands Group is expected to under-perform the PVH Corp. In addition to that, Digital Brands is 8.57 times more volatile than PVH Corp. It trades about -0.11 of its total potential returns per unit of risk. PVH Corp is currently generating about 0.1 per unit of volatility. If you would invest 9,586 in PVH Corp on September 15, 2024 and sell it today you would earn a total of 1,131 from holding PVH Corp or generate 11.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Digital Brands Group vs. PVH Corp
Performance |
Timeline |
Digital Brands Group |
PVH Corp |
Digital Brands and PVH Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Digital Brands and PVH Corp
The main advantage of trading using opposite Digital Brands and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Brands position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.Digital Brands vs. Burlington Stores | Digital Brands vs. Urban Outfitters | Digital Brands vs. American Eagle Outfitters | Digital Brands vs. Childrens Place |
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Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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