Correlation Between Dunelm Group and Guess
Can any of the company-specific risk be diversified away by investing in both Dunelm Group and Guess 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 Dunelm Group and Guess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunelm Group PLC and Guess Inc, you can compare the effects of market volatilities on Dunelm Group and Guess 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 Dunelm Group with a short position of Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunelm Group and Guess.
Diversification Opportunities for Dunelm Group and Guess
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunelm and Guess is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dunelm Group PLC and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc and Dunelm Group 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 Dunelm Group PLC are associated (or correlated) with Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Dunelm Group i.e., Dunelm Group and Guess go up and down completely randomly.
Pair Corralation between Dunelm Group and Guess
Assuming the 90 days horizon Dunelm Group PLC is expected to generate 1.35 times more return on investment than Guess. However, Dunelm Group is 1.35 times more volatile than Guess Inc. It trades about 0.03 of its potential returns per unit of risk. Guess Inc is currently generating about -0.03 per unit of risk. If you would invest 1,365 in Dunelm Group PLC on September 12, 2024 and sell it today you would earn a total of 101.00 from holding Dunelm Group PLC or generate 7.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 84.68% |
Values | Daily Returns |
Dunelm Group PLC vs. Guess Inc
Performance |
Timeline |
Dunelm Group PLC |
Guess Inc |
Dunelm Group and Guess Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dunelm Group and Guess
The main advantage of trading using opposite Dunelm Group and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunelm Group position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.Dunelm Group vs. National Vision Holdings | Dunelm Group vs. ODP Corp | Dunelm Group vs. Sally Beauty Holdings | Dunelm Group vs. Murphy USA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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