Correlation Between Thayer Ventures and Digital Brands

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

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

Diversification Opportunities for Thayer Ventures and Digital Brands

0.03

Correlation Coefficient

Thayer Ventures  Digital Brands

Significant diversification

The 3 months correlation between Thayer and Digital is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Thayer Ventures Acquisition 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 Thayer Ventures 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 Thayer Ventures Acquisition 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 Thayer Ventures i.e., Thayer Ventures and Digital Brands go up and down completely randomly.

Pair Corralation between Thayer Ventures and Digital Brands

Assuming the 90 days horizon Thayer Ventures is expected to generate 1.53 times less return on investment than Digital Brands. In addition to that, Thayer Ventures is 1.41 times more volatile than Digital Brands Group. It trades about 0.05 of its total potential returns per unit of risk. Digital Brands Group is currently generating about 0.1 per unit of volatility. If you would invest  1,450  in Digital Brands Group on September 12, 2024 and sell it today you would earn a total of  400.00  from holding Digital Brands Group or generate 27.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Thayer Ventures Acquisition  vs.  Digital Brands Group

Thayer Ventures Acqu

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thayer Ventures Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Thayer Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

Digital Brands Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Brands Group are ranked lower than 8 (%) 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.

Pair Trading with Thayer Ventures and Digital Brands

The main advantage of trading using opposite Thayer Ventures and Digital Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thayer Ventures 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 Thayer Ventures Acquisition 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.