Correlation Between DICKS Sporting and CSL
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting and CSL 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 CSL 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 CSL LTD SPONADR, you can compare the effects of market volatilities on DICKS Sporting and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and CSL.
Diversification Opportunities for DICKS Sporting and CSL
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DICKS and CSL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and CSL go up and down completely randomly.
Pair Corralation between DICKS Sporting and CSL
Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 1.82 times more return on investment than CSL. However, DICKS Sporting is 1.82 times more volatile than CSL LTD SPONADR. It trades about 0.07 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about 0.0 per unit of risk. If you would invest 10,512 in DICKS Sporting Goods on October 11, 2024 and sell it today you would earn a total of 11,368 from holding DICKS Sporting Goods or generate 108.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DICKS Sporting Goods vs. CSL LTD SPONADR
Performance |
| Timeline |
| DICKS Sporting Goods |
| CSL LTD SPONADR |
DICKS Sporting and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DICKS Sporting and CSL
The main advantage of trading using opposite DICKS Sporting and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| DICKS Sporting vs. Auto Trader Group | DICKS Sporting vs. CAREER EDUCATION | DICKS Sporting vs. STRAYER EDUCATION | DICKS Sporting vs. The Trade Desk |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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