Correlation Between Dixons Carphone and Green River
Can any of the company-specific risk be diversified away by investing in both Dixons Carphone and Green River 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 Dixons Carphone and Green River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dixons Carphone plc and Green River Gold, you can compare the effects of market volatilities on Dixons Carphone and Green River 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 Dixons Carphone with a short position of Green River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixons Carphone and Green River.
Diversification Opportunities for Dixons Carphone and Green River
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dixons and Green is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and Green River Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green River Gold and Dixons Carphone 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 Dixons Carphone plc are associated (or correlated) with Green River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green River Gold has no effect on the direction of Dixons Carphone i.e., Dixons Carphone and Green River go up and down completely randomly.
Pair Corralation between Dixons Carphone and Green River
Assuming the 90 days horizon Dixons Carphone is expected to generate 183.56 times less return on investment than Green River. But when comparing it to its historical volatility, Dixons Carphone plc is 6.41 times less risky than Green River. It trades about 0.01 of its potential returns per unit of risk. Green River Gold is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 0.58 in Green River Gold on November 3, 2024 and sell it today you would earn a total of 0.42 from holding Green River Gold or generate 72.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dixons Carphone plc vs. Green River Gold
Performance |
| Timeline |
| Dixons Carphone plc |
| Green River Gold |
Dixons Carphone and Green River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dixons Carphone and Green River
The main advantage of trading using opposite Dixons Carphone and Green River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dixons Carphone position performs unexpectedly, Green River 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 Green River will offset losses from the drop in Green River's long position.| Dixons Carphone vs. Nasdaq Inc | Dixons Carphone vs. Aldel Financial II | Dixons Carphone vs. Tandem Diabetes Care | Dixons Carphone vs. National Vision Holdings |
| Green River vs. Dixons Carphone plc | Green River vs. Ceconomy AG ADR | Green River vs. Tandy Leather Factory | Green River vs. Card Factory plc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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