Correlation Between JJill and Designer Brands

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Can any of the company-specific risk be diversified away by investing in both JJill 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 JJill and Designer Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJill Inc and Designer Brands, you can compare the effects of market volatilities on JJill 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 JJill with a short position of Designer Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of JJill and Designer Brands.

Diversification Opportunities for JJill and Designer Brands

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between JJill and Designer is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding JJill Inc and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands and JJill 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 JJill Inc 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 JJill i.e., JJill and Designer Brands go up and down completely randomly.

Pair Corralation between JJill and Designer Brands

Given the investment horizon of 90 days JJill Inc is expected to generate 0.67 times more return on investment than Designer Brands. However, JJill Inc is 1.49 times less risky than Designer Brands. It trades about 0.07 of its potential returns per unit of risk. Designer Brands is currently generating about 0.01 per unit of risk. If you would invest  1,525  in JJill Inc on December 29, 2023 and sell it today you would earn a total of  1,672  from holding JJill Inc or generate 109.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

JJill Inc  vs.  Designer Brands

 Performance 
       Timeline  
JJill Inc 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, JJill disclosed solid returns over the last few months and may actually be approaching a breakup point.
Designer Brands 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Designer Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental drivers, Designer Brands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

JJill and Designer Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JJill and Designer Brands

The main advantage of trading using opposite JJill and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JJill 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 JJill Inc 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 CEOs Directory module to screen CEOs from public companies around the world.

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