Correlation Between EBay and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both EBay and DICKS Sporting 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 EBay and DICKS Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eBay Inc and DICKS Sporting Goods, you can compare the effects of market volatilities on EBay and DICKS Sporting 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 EBay with a short position of DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and DICKS Sporting.
Diversification Opportunities for EBay and DICKS Sporting
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between EBay and DICKS is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods and EBay 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 eBay Inc are associated (or correlated) with DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of EBay i.e., EBay and DICKS Sporting go up and down completely randomly.
Pair Corralation between EBay and DICKS Sporting
Assuming the 90 days horizon eBay Inc is expected to generate 0.52 times more return on investment than DICKS Sporting. However, eBay Inc is 1.91 times less risky than DICKS Sporting. It trades about 0.41 of its potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.15 per unit of risk. If you would invest 5,226 in eBay Inc on September 1, 2024 and sell it today you would earn a total of 888.00 from holding eBay Inc or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
eBay Inc vs. DICKS Sporting Goods
Performance |
| Timeline |
| eBay Inc |
| DICKS Sporting Goods |
EBay and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBay and DICKS Sporting
The main advantage of trading using opposite EBay and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.| EBay vs. DIVERSIFIED ROYALTY | EBay vs. Cass Information Systems | EBay vs. Apollo Investment Corp | EBay vs. Data3 Limited |
| DICKS Sporting vs. MercadoLibre | DICKS Sporting vs. AutoZone | DICKS Sporting vs. Superior Plus Corp | DICKS Sporting vs. NMI Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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