Correlation Between Dicks Sporting and Monro Muffler
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Monro Muffler 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 Monro Muffler 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 Monro Muffler Brake, you can compare the effects of market volatilities on Dicks Sporting and Monro Muffler 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 Monro Muffler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Monro Muffler.
Diversification Opportunities for Dicks Sporting and Monro Muffler
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dicks and Monro is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Monro Muffler Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monro Muffler Brake 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 Monro Muffler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monro Muffler Brake has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Monro Muffler go up and down completely randomly.
Pair Corralation between Dicks Sporting and Monro Muffler
Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.97 times more return on investment than Monro Muffler. However, Dicks Sporting Goods is 1.03 times less risky than Monro Muffler. It trades about 0.22 of its potential returns per unit of risk. Monro Muffler Brake is currently generating about -0.27 per unit of risk. If you would invest 19,273 in Dicks Sporting Goods on November 1, 2024 and sell it today you would earn a total of 5,766 from holding Dicks Sporting Goods or generate 29.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicks Sporting Goods vs. Monro Muffler Brake
Performance |
| Timeline |
| Dicks Sporting Goods |
| Monro Muffler Brake |
Dicks Sporting and Monro Muffler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and Monro Muffler
The main advantage of trading using opposite Dicks Sporting and Monro Muffler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Monro Muffler 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 Monro Muffler will offset losses from the drop in Monro Muffler's long position.| Dicks Sporting vs. RH | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Best Buy Co | Dicks Sporting vs. Ulta Beauty |
| Monro Muffler vs. Motorcar Parts of | Monro Muffler vs. Standard Motor Products | Monro Muffler vs. Stoneridge | Monro Muffler vs. Douglas Dynamics |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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