Correlation Between Dicks Sporting and Dillards
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Dillards 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 Dicks Sporting and Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dicks Sporting Goods and Dillards, you can compare the effects of market volatilities on Dicks Sporting and Dillards 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 Dicks Sporting with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Dillards.
Diversification Opportunities for Dicks Sporting and Dillards
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dicks and Dillards is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Dicks Sporting 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 Dicks Sporting Goods are associated (or correlated) with Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Dillards go up and down completely randomly.
Pair Corralation between Dicks Sporting and Dillards
Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 1.12 times more return on investment than Dillards. However, Dicks Sporting is 1.12 times more volatile than Dillards. It trades about 0.15 of its potential returns per unit of risk. Dillards is currently generating about -0.04 per unit of risk. If you would invest 16,561 in Dicks Sporting Goods on January 20, 2024 and sell it today you would earn a total of 2,961 from holding Dicks Sporting Goods or generate 17.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicks Sporting Goods vs. Dillards
Performance |
| Timeline |
| Dicks Sporting Goods |
| Dillards |
Dicks Sporting and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and Dillards
The main advantage of trading using opposite Dicks Sporting and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.| Dicks Sporting vs. OReilly Automotive | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Genuine Parts Co | Dicks Sporting vs. Williams Sonoma |
| Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer | Dillards vs. Dillards Capital Trust | Dillards vs. Companhia Brasileira de |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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