Correlation Between Dillards and Nordstrom
Can any of the company-specific risk be diversified away by investing in both Dillards and Nordstrom 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 Nordstrom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and Nordstrom, you can compare the effects of market volatilities on Dillards and Nordstrom 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 Nordstrom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Nordstrom.
Diversification Opportunities for Dillards and Nordstrom
Weak diversification
The 3 months correlation between Dillards and Nordstrom is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom 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 Nordstrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordstrom has no effect on the direction of Dillards i.e., Dillards and Nordstrom go up and down completely randomly.
Pair Corralation between Dillards and Nordstrom
Considering the 90-day investment horizon Dillards is expected to generate 1.37 times more return on investment than Nordstrom. However, Dillards is 1.37 times more volatile than Nordstrom. It trades about 0.31 of its potential returns per unit of risk. Nordstrom is currently generating about 0.16 per unit of risk. If you would invest 38,253 in Dillards on August 27, 2024 and sell it today you would earn a total of 8,344 from holding Dillards or generate 21.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dillards vs. Nordstrom
Performance |
| Timeline |
| Dillards |
| Nordstrom |
Dillards and Nordstrom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dillards and Nordstrom
The main advantage of trading using opposite Dillards and Nordstrom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards position performs unexpectedly, Nordstrom 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 Nordstrom will offset losses from the drop in Nordstrom's long position.| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
| Nordstrom vs. Kohls Corp | Nordstrom vs. Dillards | Nordstrom vs. Marks Spencer Group | Nordstrom 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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