Correlation Between School Specialty and Dixons Carphone
Can any of the company-specific risk be diversified away by investing in both School Specialty and Dixons Carphone 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 School Specialty and Dixons Carphone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between School Specialty and Dixons Carphone plc, you can compare the effects of market volatilities on School Specialty and Dixons Carphone 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 School Specialty with a short position of Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of School Specialty and Dixons Carphone.
Diversification Opportunities for School Specialty and Dixons Carphone
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between School and Dixons is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding School Specialty and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc and School Specialty 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 School Specialty are associated (or correlated) with Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of School Specialty i.e., School Specialty and Dixons Carphone go up and down completely randomly.
Pair Corralation between School Specialty and Dixons Carphone
Given the investment horizon of 90 days School Specialty is expected to generate 12.86 times more return on investment than Dixons Carphone. However, School Specialty is 12.86 times more volatile than Dixons Carphone plc. It trades about 0.04 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.02 per unit of risk. If you would invest 0.02 in School Specialty on August 27, 2024 and sell it today you would lose (0.01) from holding School Specialty or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
School Specialty vs. Dixons Carphone plc
Performance |
| Timeline |
| School Specialty |
| Dixons Carphone plc |
School Specialty and Dixons Carphone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with School Specialty and Dixons Carphone
The main advantage of trading using opposite School Specialty and Dixons Carphone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if School Specialty position performs unexpectedly, Dixons Carphone 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 Dixons Carphone will offset losses from the drop in Dixons Carphone's long position.| School Specialty vs. Card Factory plc | School Specialty vs. Ceconomy AG ADR | School Specialty vs. Bowlin Travel Centers | School Specialty vs. National Vision Holdings |
| Dixons Carphone vs. Verde Clean Fuels | Dixons Carphone vs. Flexible Solutions International | Dixons Carphone vs. Alaska Air Group | Dixons Carphone vs. Consol Energy |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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