Correlation Between Dicks Sporting and Dixons Carphone
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Dixons Carphone 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 Dixons Carphone 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 Dixons Carphone plc, you can compare the effects of market volatilities on Dicks Sporting and Dixons Carphone 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 Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Dixons Carphone.
Diversification Opportunities for Dicks Sporting and Dixons Carphone
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dicks and Dixons is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc 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 Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Dixons Carphone go up and down completely randomly.
Pair Corralation between Dicks Sporting and Dixons Carphone
Considering the 90-day investment horizon Dicks Sporting is expected to generate 1.32 times less return on investment than Dixons Carphone. But when comparing it to its historical volatility, Dicks Sporting Goods is 1.6 times less risky than Dixons Carphone. It trades about 0.08 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 59.00 in Dixons Carphone plc on September 2, 2024 and sell it today you would earn a total of 39.00 from holding Dixons Carphone plc or generate 66.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dicks Sporting Goods vs. Dixons Carphone plc
Performance |
| Timeline |
| Dicks Sporting Goods |
| Dixons Carphone plc |
Dicks Sporting and Dixons Carphone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and Dixons Carphone
The main advantage of trading using opposite Dicks Sporting and Dixons Carphone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Dixons Carphone 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 Dixons Carphone will offset losses from the drop in Dixons Carphone's long position.| Dicks Sporting vs. Alcon AG | Dicks Sporting vs. The Cooper Companies, | Dicks Sporting vs. AngioDynamics | Dicks Sporting vs. AptarGroup |
| Dixons Carphone vs. Ulta Beauty | Dixons Carphone vs. Williams Sonoma | Dixons Carphone vs. Dicks Sporting Goods | Dixons Carphone vs. Best Buy Co |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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