Correlation Between Dicks Sporting and Big Lots
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Big Lots 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 Big Lots 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 Big Lots, you can compare the effects of market volatilities on Dicks Sporting and Big Lots 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 Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Big Lots.
Diversification Opportunities for Dicks Sporting and Big Lots
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dicks and Big is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots 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 Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Big Lots go up and down completely randomly.
Pair Corralation between Dicks Sporting and Big Lots
Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.3 times more return on investment than Big Lots. However, Dicks Sporting Goods is 3.38 times less risky than Big Lots. It trades about 0.06 of its potential returns per unit of risk. Big Lots is currently generating about -0.09 per unit of risk. If you would invest 12,984 in Dicks Sporting Goods on August 31, 2024 and sell it today you would earn a total of 7,740 from holding Dicks Sporting Goods or generate 59.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.9% |
| Values | Daily Returns |
Dicks Sporting Goods vs. Big Lots
Performance |
| Timeline |
| Dicks Sporting Goods |
| Big Lots |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dicks Sporting and Big Lots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and Big Lots
The main advantage of trading using opposite Dicks Sporting and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.| Dicks Sporting vs. RH | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Best Buy Co | Dicks Sporting vs. Ulta Beauty |
| Big Lots vs. BJs Wholesale Club | Big Lots vs. Dollar General | Big Lots vs. Costco Wholesale Corp | Big Lots vs. Walmart |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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