Correlation Between Digital Brands and Vince Holding

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

Diversification Opportunities for Digital Brands and Vince Holding

0.59

Correlation Coefficient

Digital Brands  Vince Holding

Very weak diversification

The 3 months correlation between Digital and Vince is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Digital Brands Group and Vince Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vince Holding 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 Vince Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vince Holding Corp has no effect on the direction of Digital Brands i.e., Digital Brands and Vince Holding go up and down completely randomly.

Pair Corralation between Digital Brands and Vince Holding

Given the investment horizon of 90 days Digital Brands Group is expected to under-perform the Vince Holding. In addition to that, Digital Brands is 1.84 times more volatile than Vince Holding Corp. It trades about -0.07 of its total potential returns per unit of risk. Vince Holding Corp is currently generating about 0.03 per unit of volatility. If you would invest  228.00  in Vince Holding Corp on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Vince Holding Corp or generate 0.0% return on investment over 90 days.

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

Digital Brands Group  vs.  Vince Holding Corp

Digital Brands Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Brands Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Vince Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vince Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Digital Brands and Vince Holding

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

The idea behind Digital Brands Group and Vince Holding Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.