Correlation Between Dixons Carphone and Winmark
Can any of the company-specific risk be diversified away by investing in both Dixons Carphone and Winmark 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 Winmark 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 Winmark, you can compare the effects of market volatilities on Dixons Carphone and Winmark 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 Winmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixons Carphone and Winmark.
Diversification Opportunities for Dixons Carphone and Winmark
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dixons and Winmark is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and Winmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winmark 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 Winmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winmark has no effect on the direction of Dixons Carphone i.e., Dixons Carphone and Winmark go up and down completely randomly.
Pair Corralation between Dixons Carphone and Winmark
Assuming the 90 days horizon Dixons Carphone is expected to generate 5.11 times less return on investment than Winmark. But when comparing it to its historical volatility, Dixons Carphone plc is 1.04 times less risky than Winmark. It trades about 0.01 of its potential returns per unit of risk. Winmark is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 35,151 in Winmark on September 1, 2024 and sell it today you would earn a total of 6,042 from holding Winmark or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dixons Carphone plc vs. Winmark
Performance |
| Timeline |
| Dixons Carphone plc |
| Winmark |
Dixons Carphone and Winmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dixons Carphone and Winmark
The main advantage of trading using opposite Dixons Carphone and Winmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dixons Carphone position performs unexpectedly, Winmark 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 Winmark will offset losses from the drop in Winmark's long position.| Dixons Carphone vs. Sun Country Airlines | Dixons Carphone vs. United Airlines Holdings | Dixons Carphone vs. Summit Environmental | Dixons Carphone vs. Afya |
| Winmark vs. Mesa Laboratories | Winmark vs. Utah Medical Products | Winmark vs. Weyco Group | Winmark vs. Diamond Hill Investment |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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