Correlation Between Digital Brands and Phunware

Can any of the company-specific risk be diversified away by investing in both Digital Brands and Phunware 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 Phunware 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 Phunware, you can compare the effects of market volatilities on Digital Brands and Phunware 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 Phunware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Brands and Phunware.

Diversification Opportunities for Digital Brands and Phunware

-0.17

Correlation Coefficient

Digital Brands  Phunware

Good diversification

The 3 months correlation between Digital and Phunware is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Digital Brands Group and Phunware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phunware 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 Phunware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phunware has no effect on the direction of Digital Brands i.e., Digital Brands and Phunware go up and down completely randomly.

Pair Corralation between Digital Brands and Phunware

If you would invest  1,160  in Digital Brands Group on September 3, 2024 and sell it today you would earn a total of  500.00  from holding Digital Brands Group or generate 43.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

Digital Brands Group  vs.  Phunware

Digital Brands Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Brands Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Digital Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Phunware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phunware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Phunware 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 Digital Brands and Phunware

The main advantage of trading using opposite Digital Brands and Phunware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Brands position performs unexpectedly, Phunware 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 Phunware will offset losses from the drop in Phunware's long position.

The idea behind Digital Brands Group and Phunware 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.