Correlation Between Dixons Carphone and School Specialty
Can any of the company-specific risk be diversified away by investing in both Dixons Carphone and School Specialty 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 School Specialty 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 School Specialty, you can compare the effects of market volatilities on Dixons Carphone and School Specialty 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 School Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixons Carphone and School Specialty.
Diversification Opportunities for Dixons Carphone and School Specialty
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dixons and School is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and School Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on School Specialty 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 School Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of School Specialty has no effect on the direction of Dixons Carphone i.e., Dixons Carphone and School Specialty go up and down completely randomly.
Pair Corralation between Dixons Carphone and School Specialty
Assuming the 90 days horizon Dixons Carphone is expected to generate 23.76 times less return on investment than School Specialty. But when comparing it to its historical volatility, Dixons Carphone plc is 12.87 times less risky than School Specialty. It trades about 0.02 of its potential returns per unit of risk. School Specialty is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.02 in School Specialty on August 24, 2024 and sell it today you would lose (0.01) from holding School Specialty or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dixons Carphone plc vs. School Specialty
Performance |
| Timeline |
| Dixons Carphone plc |
| School Specialty |
Dixons Carphone and School Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dixons Carphone and School Specialty
The main advantage of trading using opposite Dixons Carphone and School Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dixons Carphone position performs unexpectedly, School Specialty 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 School Specialty will offset losses from the drop in School Specialty's long position.| Dixons Carphone vs. Burlington Stores | Dixons Carphone vs. Childrens Place | Dixons Carphone vs. Buckle Inc | Dixons Carphone vs. Shoe Carnival |
| School Specialty vs. Arhaus Inc | School Specialty vs. Floor Decor Holdings | School Specialty vs. Live Ventures | School Specialty vs. Marvell Technology Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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