Correlation Between Dillards and Woolworths Holdings
Can any of the company-specific risk be diversified away by investing in both Dillards and Woolworths Holdings 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 Woolworths Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and Woolworths Holdings Ltd, you can compare the effects of market volatilities on Dillards and Woolworths Holdings 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 Woolworths Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Woolworths Holdings.
Diversification Opportunities for Dillards and Woolworths Holdings
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dillards and Woolworths is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Woolworths Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Holdings 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 Woolworths Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Holdings has no effect on the direction of Dillards i.e., Dillards and Woolworths Holdings go up and down completely randomly.
Pair Corralation between Dillards and Woolworths Holdings
Considering the 90-day investment horizon Dillards is expected to under-perform the Woolworths Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Dillards is 1.27 times less risky than Woolworths Holdings. The stock trades about -0.16 of its potential returns per unit of risk. The Woolworths Holdings Ltd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 293.00 in Woolworths Holdings Ltd on January 23, 2025 and sell it today you would earn a total of 25.00 from holding Woolworths Holdings Ltd or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dillards vs. Woolworths Holdings Ltd
Performance |
| Timeline |
| Dillards |
| Woolworths Holdings |
Dillards and Woolworths Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dillards and Woolworths Holdings
The main advantage of trading using opposite Dillards and Woolworths Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards position performs unexpectedly, Woolworths Holdings 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 Woolworths Holdings will offset losses from the drop in Woolworths Holdings' long position.| Dillards vs. Macys Inc | Dillards vs. Kohls | 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |