Correlation Between OReilly Automotive and Dunelm Group
Can any of the company-specific risk be diversified away by investing in both OReilly Automotive and Dunelm Group 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 OReilly Automotive and Dunelm Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OReilly Automotive and Dunelm Group PLC, you can compare the effects of market volatilities on OReilly Automotive and Dunelm Group 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 OReilly Automotive with a short position of Dunelm Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of OReilly Automotive and Dunelm Group.
Diversification Opportunities for OReilly Automotive and Dunelm Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between OReilly and Dunelm is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding OReilly Automotive and Dunelm Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunelm Group PLC and OReilly Automotive 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 OReilly Automotive are associated (or correlated) with Dunelm Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunelm Group PLC has no effect on the direction of OReilly Automotive i.e., OReilly Automotive and Dunelm Group go up and down completely randomly.
Pair Corralation between OReilly Automotive and Dunelm Group
Given the investment horizon of 90 days OReilly Automotive is expected to generate 2.15 times less return on investment than Dunelm Group. But when comparing it to its historical volatility, OReilly Automotive is 1.06 times less risky than Dunelm Group. It trades about 0.15 of its potential returns per unit of risk. Dunelm Group PLC is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,204 in Dunelm Group PLC on November 28, 2024 and sell it today you would earn a total of 96.00 from holding Dunelm Group PLC or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
OReilly Automotive vs. Dunelm Group PLC
Performance |
| Timeline |
| OReilly Automotive |
| Dunelm Group PLC |
OReilly Automotive and Dunelm Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OReilly Automotive and Dunelm Group
The main advantage of trading using opposite OReilly Automotive and Dunelm Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OReilly Automotive position performs unexpectedly, Dunelm Group 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 Dunelm Group will offset losses from the drop in Dunelm Group's long position.| OReilly Automotive vs. Dicks Sporting Goods | OReilly Automotive vs. Ulta Beauty | OReilly Automotive vs. Williams Sonoma | OReilly Automotive vs. RH |
| Dunelm Group vs. National Vision Holdings | Dunelm Group vs. ODP Corp | Dunelm Group vs. Sally Beauty Holdings | Dunelm Group vs. Murphy USA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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