Correlation Between DICKS Sporting and Sea
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting and Sea 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 Sea 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 Sea Limited, you can compare the effects of market volatilities on DICKS Sporting and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and Sea.
Diversification Opportunities for DICKS Sporting and Sea
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DICKS and Sea is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Limited has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and Sea go up and down completely randomly.
Pair Corralation between DICKS Sporting and Sea
Assuming the 90 days horizon DICKS Sporting is expected to generate 1.0 times less return on investment than Sea. In addition to that, DICKS Sporting is 1.47 times more volatile than Sea Limited. It trades about 0.18 of its total potential returns per unit of risk. Sea Limited is currently generating about 0.27 per unit of volatility. If you would invest 9,820 in Sea Limited on September 15, 2024 and sell it today you would earn a total of 1,240 from holding Sea Limited or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DICKS Sporting Goods vs. Sea Limited
Performance |
| Timeline |
| DICKS Sporting Goods |
| Sea Limited |
DICKS Sporting and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DICKS Sporting and Sea
The main advantage of trading using opposite DICKS Sporting and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| DICKS Sporting vs. Superior Plus Corp | DICKS Sporting vs. SIVERS SEMICONDUCTORS AB | DICKS Sporting vs. NorAm Drilling AS | DICKS Sporting vs. Norsk Hydro ASA |
| Sea vs. ANTA SPORTS PRODUCT | Sea vs. DICKS Sporting Goods | Sea vs. China Communications Services | Sea vs. USWE SPORTS AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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