Correlation Between Dicks Sporting and Williams Sonoma

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

Diversification Opportunities for Dicks Sporting and Williams Sonoma

0.73

Correlation Coefficient

Dicks Sporting  Williams Sonoma

Poor diversification

The 3 months correlation between Dicks and Williams is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Williams Sonoma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Sonoma 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 Williams Sonoma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Sonoma has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Williams Sonoma go up and down completely randomly.

Pair Corralation between Dicks Sporting and Williams Sonoma

Considering the 90-day investment horizon Dicks Sporting is expected to generate 1.83 times less return on investment than Williams Sonoma. In addition to that, Dicks Sporting is 1.32 times more volatile than Williams Sonoma. It trades about 0.07 of its total potential returns per unit of risk. Williams Sonoma is currently generating about 0.18 per unit of volatility. If you would invest  15,703  in Williams Sonoma on May 7, 2025 and sell it today you would earn a total of  4,349  from holding Williams Sonoma or generate 27.7% return on investment over 90 days.

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

Dicks Sporting Goods  vs.  Williams Sonoma

Dicks Sporting Goods

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Dicks Sporting unveiled solid returns over the last few months and may actually be approaching a breakup point.

Williams Sonoma

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Sonoma are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Williams Sonoma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dicks Sporting and Williams Sonoma

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

The idea behind Dicks Sporting Goods and Williams Sonoma 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.