Correlation Between Big Lots and Dillards
Can any of the company-specific risk be diversified away by investing in both Big Lots 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 Big Lots and Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Lots and Dillards, you can compare the effects of market volatilities on Big Lots 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 Big Lots with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Lots and Dillards.
Diversification Opportunities for Big Lots and Dillards
Pay attention - limited upside
The 3 months correlation between Big and Dillards is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Big Lots and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Big Lots 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 Lots 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 Big Lots i.e., Big Lots and Dillards go up and down completely randomly.
Pair Corralation between Big Lots and Dillards
Considering the 90-day investment horizon Big Lots is expected to under-perform the Dillards. In addition to that, Big Lots is 3.45 times more volatile than Dillards. It trades about -0.09 of its total potential returns per unit of risk. Dillards is currently generating about 0.05 per unit of volatility. If you would invest 31,954 in Dillards on August 31, 2024 and sell it today you would earn a total of 12,358 from holding Dillards or generate 38.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 86.9% |
| Values | Daily Returns |
Big Lots vs. Dillards
Performance |
| Timeline |
| Big Lots |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dillards |
Big Lots and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Lots and Dillards
The main advantage of trading using opposite Big Lots and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Lots 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.| Big Lots vs. BJs Wholesale Club | Big Lots vs. Dollar General | Big Lots vs. Costco Wholesale Corp | Big Lots vs. Walmart |
| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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