Correlation Between Dixons Carphone and Dr Martens

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

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

Diversification Opportunities for Dixons Carphone and Dr Martens

-0.3

Correlation Coefficient

Dixons Carphone  Dr Martens

Very good diversification

The 3 months correlation between Dixons and DOCMF is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and Dr Martens plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Martens plc and Dixons Carphone 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 Dixons Carphone plc are associated (or correlated) with Dr Martens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Martens plc has no effect on the direction of Dixons Carphone i.e., Dixons Carphone and Dr Martens go up and down completely randomly.

Pair Corralation between Dixons Carphone and Dr Martens

Assuming the 90 days horizon Dixons Carphone plc is expected to under-perform the Dr Martens. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dixons Carphone plc is 3.39 times less risky than Dr Martens. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Dr Martens plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Dr Martens plc on May 16, 2025 and sell it today you would earn a total of  20.00  from holding Dr Martens plc or generate 24.1% return on investment over 90 days.

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

Dixons Carphone plc  vs.  Dr Martens plc

Dixons Carphone plc

Risk-Adjusted Performance

Weakest

Over the last 90 days Dixons Carphone plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dr Martens plc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Dr Martens plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Dr Martens reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dixons Carphone and Dr Martens

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

The idea behind Dixons Carphone plc and Dr Martens plc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.