Correlation Between Dicks Sporting and Amazon
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Amazon 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 Dicks Sporting and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dicks Sporting Goods and Amazon Inc, you can compare the effects of market volatilities on Dicks Sporting and Amazon 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 Dicks Sporting with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Amazon.
Diversification Opportunities for Dicks Sporting and Amazon
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dicks and Amazon is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Dicks Sporting 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 Dicks Sporting Goods are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Amazon go up and down completely randomly.
Pair Corralation between Dicks Sporting and Amazon
Considering the 90-day investment horizon Dicks Sporting is expected to generate 1.87 times less return on investment than Amazon. But when comparing it to its historical volatility, Dicks Sporting Goods is 1.23 times less risky than Amazon. It trades about 0.07 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 18,839 in Amazon Inc on August 27, 2024 and sell it today you would earn a total of 873.00 from holding Amazon Inc or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicks Sporting Goods vs. Amazon Inc
Performance |
| Timeline |
| Dicks Sporting Goods |
| Amazon Inc |
Dicks Sporting and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and Amazon
The main advantage of trading using opposite Dicks Sporting and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Dicks Sporting vs. RH | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Best Buy Co | Dicks Sporting vs. Ulta Beauty |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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