Correlation Between Guess and Dillards
Can any of the company-specific risk be diversified away by investing in both Guess and Dillards 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 Guess and Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guess Inc and Dillards, you can compare the effects of market volatilities on Guess and Dillards 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 Guess with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guess and Dillards.
Diversification Opportunities for Guess and Dillards
Excellent diversification
The 3 months correlation between Guess and Dillards is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Guess 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 Guess Inc are associated (or correlated) with Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Guess i.e., Guess and Dillards go up and down completely randomly.
Pair Corralation between Guess and Dillards
Considering the 90-day investment horizon Guess Inc is expected to under-perform the Dillards. But the stock apears to be less risky and, when comparing its historical volatility, Guess Inc is 1.05 times less risky than Dillards. The stock trades about -0.01 of its potential returns per unit of risk. The Dillards is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 34,296 in Dillards on August 27, 2024 and sell it today you would earn a total of 10,319 from holding Dillards or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guess Inc vs. Dillards
Performance |
| Timeline |
| Guess Inc |
| Dillards |
Guess and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guess and Dillards
The main advantage of trading using opposite Guess and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guess position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.The idea behind Guess Inc and Dillards 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.| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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