Correlation Between Macys and Dillards
Can any of the company-specific risk be diversified away by investing in both Macys 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 Macys and Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and Dillards, you can compare the effects of market volatilities on Macys 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 Macys with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Dillards.
Diversification Opportunities for Macys and Dillards
Very weak diversification
The 3 months correlation between Macys and Dillards is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Macys 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 Macys 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 Macys i.e., Macys and Dillards go up and down completely randomly.
Pair Corralation between Macys and Dillards
Taking into account the 90-day investment horizon Macys is expected to generate 2.82 times less return on investment than Dillards. But when comparing it to its historical volatility, Macys Inc is 1.05 times less risky than Dillards. It trades about 0.1 of its potential returns per unit of risk. Dillards is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 38,253 in Dillards on August 27, 2024 and sell it today you would earn a total of 6,362 from holding Dillards or generate 16.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macys Inc vs. Dillards
Performance |
| Timeline |
| Macys Inc |
| Dillards |
Macys and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macys and Dillards
The main advantage of trading using opposite Macys and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys 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 Macys 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |