Correlation Between Card Factory and Dixons Carphone
Can any of the company-specific risk be diversified away by investing in both Card Factory and Dixons Carphone 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 Card Factory and Dixons Carphone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Card Factory plc and Dixons Carphone plc, you can compare the effects of market volatilities on Card Factory and Dixons Carphone 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 Card Factory with a short position of Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Card Factory and Dixons Carphone.
Diversification Opportunities for Card Factory and Dixons Carphone
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Card and Dixons is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc and Card Factory 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 Card Factory plc are associated (or correlated) with Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Card Factory i.e., Card Factory and Dixons Carphone go up and down completely randomly.
Pair Corralation between Card Factory and Dixons Carphone
Assuming the 90 days horizon Card Factory plc is expected to under-perform the Dixons Carphone. In addition to that, Card Factory is 2.67 times more volatile than Dixons Carphone plc. It trades about -0.25 of its total potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.01 per unit of volatility. If you would invest 118.00 in Dixons Carphone plc on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Dixons Carphone plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Card Factory plc vs. Dixons Carphone plc
Performance |
| Timeline |
| Card Factory plc |
| Dixons Carphone plc |
Card Factory and Dixons Carphone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Card Factory and Dixons Carphone
The main advantage of trading using opposite Card Factory and Dixons Carphone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Card Factory position performs unexpectedly, Dixons Carphone 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 Dixons Carphone will offset losses from the drop in Dixons Carphone's long position.| Card Factory vs. Ulta Beauty | Card Factory vs. Williams Sonoma | Card Factory vs. Dicks Sporting Goods | Card Factory vs. Best Buy Co |
| Dixons Carphone vs. Nasdaq Inc | Dixons Carphone vs. Aldel Financial II | Dixons Carphone vs. Tandem Diabetes Care | Dixons Carphone vs. National Vision Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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