Correlation Between Parkson Retail and Dillards
Can any of the company-specific risk be diversified away by investing in both Parkson Retail 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 Parkson Retail and Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parkson Retail Group and Dillards, you can compare the effects of market volatilities on Parkson Retail 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 Parkson Retail with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkson Retail and Dillards.
Diversification Opportunities for Parkson Retail and Dillards
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Parkson and Dillards is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Parkson Retail Group and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Parkson Retail 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 Parkson Retail Group 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 Parkson Retail i.e., Parkson Retail and Dillards go up and down completely randomly.
Pair Corralation between Parkson Retail and Dillards
Assuming the 90 days trading horizon Parkson Retail Group is expected to generate 7.15 times more return on investment than Dillards. However, Parkson Retail is 7.15 times more volatile than Dillards. It trades about 0.06 of its potential returns per unit of risk. Dillards is currently generating about 0.03 per unit of risk. If you would invest 1.75 in Parkson Retail Group on September 3, 2024 and sell it today you would lose (0.95) from holding Parkson Retail Group or give up 54.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parkson Retail Group vs. Dillards
Performance |
| Timeline |
| Parkson Retail Group |
| Dillards |
Parkson Retail and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parkson Retail and Dillards
The main advantage of trading using opposite Parkson Retail and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkson Retail 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.| Parkson Retail vs. RYOHIN UNSPADR1 | Parkson Retail vs. Superior Plus Corp | Parkson Retail vs. NMI Holdings | Parkson Retail vs. Origin Agritech |
| Dillards vs. RYOHIN UNSPADR1 | Dillards vs. Superior Plus Corp | Dillards vs. NMI Holdings | Dillards vs. Origin Agritech |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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