Correlation Between Dr Martens and Phoenix Footwear

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

By analyzing existing cross correlation between Dr Martens plc and Phoenix Footwear Group, you can compare the effects of market volatilities on Dr Martens and Phoenix Footwear 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 Dr Martens with a short position of Phoenix Footwear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dr Martens and Phoenix Footwear.

Diversification Opportunities for Dr Martens and Phoenix Footwear

0.17

Correlation Coefficient

Dr Martens  Phoenix Footwear

Average diversification

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

Pair Corralation between Dr Martens and Phoenix Footwear

If you would invest  88.00  in Dr Martens plc on September 16, 2024 and sell it today you would earn a total of  11.00  from holding Dr Martens plc or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Dr Martens plc  vs.  Phoenix Footwear Group

Dr Martens plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dr Martens plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, Dr Martens reported solid returns over the last few months and may actually be approaching a breakup point.

Phoenix Footwear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix Footwear Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Phoenix Footwear is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dr Martens and Phoenix Footwear

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

The idea behind Dr Martens plc and Phoenix Footwear 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.