Correlation Between DSS and Resources Connection
Can any of the company-specific risk be diversified away by investing in both DSS and Resources Connection 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 DSS and Resources Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSS Inc and Resources Connection, you can compare the effects of market volatilities on DSS and Resources Connection 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 DSS with a short position of Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSS and Resources Connection.
Diversification Opportunities for DSS and Resources Connection
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between DSS and Resources is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding DSS Inc and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection and DSS 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 DSS Inc are associated (or correlated) with Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of DSS i.e., DSS and Resources Connection go up and down completely randomly.
Pair Corralation between DSS and Resources Connection
Considering the 90-day investment horizon DSS Inc is expected to under-perform the Resources Connection. In addition to that, DSS is 2.32 times more volatile than Resources Connection. It trades about -0.05 of its total potential returns per unit of risk. Resources Connection is currently generating about -0.07 per unit of volatility. If you would invest 1,660 in Resources Connection on November 9, 2024 and sell it today you would lose (851.00) from holding Resources Connection or give up 51.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSS Inc vs. Resources Connection
Performance |
| Timeline |
| DSS Inc |
| Resources Connection |
DSS and Resources Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSS and Resources Connection
The main advantage of trading using opposite DSS and Resources Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSS position performs unexpectedly, Resources Connection 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 Resources Connection will offset losses from the drop in Resources Connection's long position.The idea behind DSS Inc and Resources Connection pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Resources Connection vs. CRA International | Resources Connection vs. Huron Consulting Group | Resources Connection vs. Forrester Research | Resources Connection vs. Exponent |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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