Correlation Between DICKS Sporting and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on DICKS Sporting and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and Dairy Farm.
Diversification Opportunities for DICKS Sporting and Dairy Farm
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between DICKS and Dairy is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and Dairy Farm go up and down completely randomly.
Pair Corralation between DICKS Sporting and Dairy Farm
Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 1.25 times more return on investment than Dairy Farm. However, DICKS Sporting is 1.25 times more volatile than Dairy Farm International. It trades about 0.01 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.06 per unit of risk. If you would invest 22,295 in DICKS Sporting Goods on October 25, 2024 and sell it today you would lose (20.00) from holding DICKS Sporting Goods or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DICKS Sporting Goods vs. Dairy Farm International
Performance |
| Timeline |
| DICKS Sporting Goods |
| Dairy Farm International |
DICKS Sporting and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DICKS Sporting and Dairy Farm
The main advantage of trading using opposite DICKS Sporting and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| DICKS Sporting vs. Playa Hotels Resorts | DICKS Sporting vs. REVO INSURANCE SPA | DICKS Sporting vs. UNIQA INSURANCE GR | DICKS Sporting vs. LG Display Co |
| Dairy Farm vs. Highlight Communications AG | Dairy Farm vs. Entravision Communications | Dairy Farm vs. Charter Communications | Dairy Farm vs. MACOM Technology Solutions |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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