Correlation Between DICKS Sporting and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on DICKS Sporting and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and Scandinavian Tobacco.
Diversification Opportunities for DICKS Sporting and Scandinavian Tobacco
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DICKS and Scandinavian is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between DICKS Sporting and Scandinavian Tobacco
Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 1.23 times more return on investment than Scandinavian Tobacco. However, DICKS Sporting is 1.23 times more volatile than Scandinavian Tobacco Group. It trades about 0.21 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.05 per unit of risk. If you would invest 18,754 in DICKS Sporting Goods on August 29, 2024 and sell it today you would earn a total of 2,666 from holding DICKS Sporting Goods or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DICKS Sporting Goods vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| DICKS Sporting Goods |
| Scandinavian Tobacco |
DICKS Sporting and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DICKS Sporting and Scandinavian Tobacco
The main advantage of trading using opposite DICKS Sporting and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| DICKS Sporting vs. Astral Foods Limited | DICKS Sporting vs. JJ SNACK FOODS | DICKS Sporting vs. Tyson Foods | DICKS Sporting vs. National Health Investors |
| Scandinavian Tobacco vs. QBE Insurance Group | Scandinavian Tobacco vs. XLMedia PLC | Scandinavian Tobacco vs. MSAD INSURANCE | Scandinavian Tobacco vs. REVO INSURANCE SPA |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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