Correlation Between DICKS Sporting and Trip Group
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting and Trip Group 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 Trip Group 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 Trip Group Limited, you can compare the effects of market volatilities on DICKS Sporting and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and Trip Group.
Diversification Opportunities for DICKS Sporting and Trip Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DICKS and Trip is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and Trip Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group 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 Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group Limited has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and Trip Group go up and down completely randomly.
Pair Corralation between DICKS Sporting and Trip Group
Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 1.32 times more return on investment than Trip Group. However, DICKS Sporting is 1.32 times more volatile than Trip Group Limited. It trades about 0.15 of its potential returns per unit of risk. Trip Group Limited is currently generating about 0.07 per unit of risk. If you would invest 18,200 in DICKS Sporting Goods on September 1, 2024 and sell it today you would earn a total of 1,845 from holding DICKS Sporting Goods or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
DICKS Sporting Goods vs. Trip Group Limited
Performance |
| Timeline |
| DICKS Sporting Goods |
| Trip Group Limited |
DICKS Sporting and Trip Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DICKS Sporting and Trip Group
The main advantage of trading using opposite DICKS Sporting and Trip Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting position performs unexpectedly, Trip Group 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 Trip Group will offset losses from the drop in Trip Group's long position.| DICKS Sporting vs. MercadoLibre | DICKS Sporting vs. AutoZone | DICKS Sporting vs. Superior Plus Corp | DICKS Sporting vs. NMI Holdings |
| Trip Group vs. Universal Insurance Holdings | Trip Group vs. GREENX METALS LTD | Trip Group vs. Japan Post Insurance | Trip Group vs. GRIFFIN MINING LTD |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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