Correlation Between DMG Mori and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both DMG Mori and DFS Furniture 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 DMG Mori and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DMG Mori Co and DFS Furniture PLC, you can compare the effects of market volatilities on DMG Mori and DFS Furniture 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 DMG Mori with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMG Mori and DFS Furniture.
Diversification Opportunities for DMG Mori and DFS Furniture
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DMG and DFS is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding DMG Mori Co and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and DMG Mori 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 DMG Mori Co are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of DMG Mori i.e., DMG Mori and DFS Furniture go up and down completely randomly.
Pair Corralation between DMG Mori and DFS Furniture
Assuming the 90 days horizon DMG Mori Co is expected to generate 1.02 times more return on investment than DFS Furniture. However, DMG Mori is 1.02 times more volatile than DFS Furniture PLC. It trades about 0.03 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.01 per unit of risk. If you would invest 1,190 in DMG Mori Co on September 3, 2024 and sell it today you would earn a total of 380.00 from holding DMG Mori Co or generate 31.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DMG Mori Co vs. DFS Furniture PLC
Performance |
| Timeline |
| DMG Mori |
| DFS Furniture PLC |
DMG Mori and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DMG Mori and DFS Furniture
The main advantage of trading using opposite DMG Mori and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMG Mori position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| DMG Mori vs. DFS Furniture PLC | DMG Mori vs. 24SEVENOFFICE GROUP AB | DMG Mori vs. Corporate Office Properties | DMG Mori vs. INVITATION HOMES DL |
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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 Stocks Directory module to find actively traded stocks across global markets.
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