Correlation Between Wearable Devices and Kontoor Brands

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

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

Diversification Opportunities for Wearable Devices and Kontoor Brands

-0.87

Correlation Coefficient

Wearable Devices  Kontoor Brands

Pay attention - limited upside

The 3 months correlation between Wearable and Kontoor is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Devices and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and Wearable Devices 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 Wearable Devices are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Wearable Devices i.e., Wearable Devices and Kontoor Brands go up and down completely randomly.

Pair Corralation between Wearable Devices and Kontoor Brands

Given the investment horizon of 90 days Wearable Devices is expected to under-perform the Kontoor Brands. In addition to that, Wearable Devices is 4.0 times more volatile than Kontoor Brands. It trades about -0.06 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.11 per unit of volatility. If you would invest  4,704  in Kontoor Brands on September 12, 2024 and sell it today you would earn a total of  4,303  from holding Kontoor Brands or generate 91.48% return on investment over 90 days.

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

Wearable Devices  vs.  Kontoor Brands

Wearable Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wearable Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kontoor Brands

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wearable Devices and Kontoor Brands

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

The idea behind Wearable Devices and Kontoor 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.