Correlation Between Big 5 and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both Big 5 and DICKS Sporting 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 Big 5 and DICKS Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and DICKS Sporting Goods, you can compare the effects of market volatilities on Big 5 and DICKS Sporting 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 Big 5 with a short position of DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and DICKS Sporting.
Diversification Opportunities for Big 5 and DICKS Sporting
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Big and DICKS is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods and Big 5 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 Big 5 Sporting are associated (or correlated) with DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of Big 5 i.e., Big 5 and DICKS Sporting go up and down completely randomly.
Pair Corralation between Big 5 and DICKS Sporting
Assuming the 90 days horizon Big 5 Sporting is expected to under-perform the DICKS Sporting. In addition to that, Big 5 is 1.81 times more volatile than DICKS Sporting Goods. It trades about -0.11 of its total potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.05 per unit of volatility. If you would invest 18,754 in DICKS Sporting Goods on August 28, 2024 and sell it today you would earn a total of 404.00 from holding DICKS Sporting Goods or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Big 5 Sporting vs. DICKS Sporting Goods
Performance |
| Timeline |
| Big 5 Sporting |
| DICKS Sporting Goods |
Big 5 and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and DICKS Sporting
The main advantage of trading using opposite Big 5 and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.The idea behind Big 5 Sporting and DICKS Sporting Goods 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.| DICKS Sporting vs. Astral Foods Limited | DICKS Sporting vs. JJ SNACK FOODS | DICKS Sporting vs. Tyson Foods | DICKS Sporting vs. National Health Investors |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |