Correlation Between Dicks Sporting and Nordstrom
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting 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 Dicks Sporting and Nordstrom 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 Nordstrom, you can compare the effects of market volatilities on Dicks Sporting 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 Dicks Sporting with a short position of Nordstrom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Nordstrom.
Diversification Opportunities for Dicks Sporting and Nordstrom
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dicks and Nordstrom is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom 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 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 Dicks Sporting i.e., Dicks Sporting and Nordstrom go up and down completely randomly.
Pair Corralation between Dicks Sporting and Nordstrom
Considering the 90-day investment horizon Dicks Sporting is expected to generate 1.47 times less return on investment than Nordstrom. But when comparing it to its historical volatility, Dicks Sporting Goods is 1.18 times less risky than Nordstrom. It trades about 0.13 of its potential returns per unit of risk. Nordstrom is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,322 in Nordstrom on August 27, 2024 and sell it today you would earn a total of 168.00 from holding Nordstrom or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicks Sporting Goods vs. Nordstrom
Performance |
| Timeline |
| Dicks Sporting Goods |
| Nordstrom |
Dicks Sporting and Nordstrom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and Nordstrom
The main advantage of trading using opposite Dicks Sporting and Nordstrom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting 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.| Dicks Sporting vs. RH | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Best Buy Co | Dicks Sporting vs. Ulta Beauty |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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