Correlation Between Dillards and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Dillards and Dow Jones 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 Dillards and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and Dow Jones Industrial, you can compare the effects of market volatilities on Dillards and Dow Jones 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 Dillards with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Dow Jones.
Diversification Opportunities for Dillards and Dow Jones
Very poor diversification
The 3 months correlation between Dillards and Dow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Dillards 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 Dillards are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Dillards i.e., Dillards and Dow Jones go up and down completely randomly.
Pair Corralation between Dillards and Dow Jones
Considering the 90-day investment horizon Dillards is expected to generate 3.29 times more return on investment than Dow Jones. However, Dillards is 3.29 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 37,547 in Dillards on August 26, 2024 and sell it today you would earn a total of 7,068 from holding Dillards or generate 18.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dillards vs. Dow Jones Industrial
Performance |
| Timeline |
Dillards and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Dillards
Pair trading matchups for Dillards
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dillards and Dow Jones
The main advantage of trading using opposite Dillards and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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