Correlation Between RumbleON and Designer Brands

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

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

Diversification Opportunities for RumbleON and Designer Brands

-0.51

Correlation Coefficient

RumbleON  Designer Brands

Excellent diversification

The 3 months correlation between RumbleON and Designer is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding RumbleON and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and RumbleON 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 RumbleON are associated (or correlated) with Designer Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Designer Brands has no effect on the direction of RumbleON i.e., RumbleON and Designer Brands go up and down completely randomly.

Pair Corralation between RumbleON and Designer Brands

Given the investment horizon of 90 days RumbleON is expected to generate 1.77 times more return on investment than Designer Brands. However, RumbleON is 1.77 times more volatile than Designer Brands. It trades about 0.23 of its potential returns per unit of risk. Designer Brands is currently generating about -0.3 per unit of risk. If you would invest  492.00  in RumbleON on August 24, 2024 and sell it today you would earn a total of  115.50  from holding RumbleON or generate 23.48% return on investment over 90 days.

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

RumbleON  vs.  Designer Brands

RumbleON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RumbleON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental drivers, RumbleON disclosed solid returns over the last few months and may actually be approaching a breakup point.

Designer Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Designer Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with RumbleON and Designer Brands

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

The idea behind RumbleON and Designer Brands 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .