Correlation Between Shoprite Holdings and Dillards
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings 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 Shoprite Holdings and Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings Ltd and Dillards, you can compare the effects of market volatilities on Shoprite Holdings 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 Shoprite Holdings with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Dillards.
Diversification Opportunities for Shoprite Holdings and Dillards
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shoprite and Dillards is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Ltd and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Shoprite Holdings 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 Shoprite Holdings Ltd 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 Shoprite Holdings i.e., Shoprite Holdings and Dillards go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Dillards
Assuming the 90 days horizon Shoprite Holdings Ltd is expected to generate 0.81 times more return on investment than Dillards. However, Shoprite Holdings Ltd is 1.23 times less risky than Dillards. It trades about 0.06 of its potential returns per unit of risk. Dillards is currently generating about 0.05 per unit of risk. If you would invest 1,323 in Shoprite Holdings Ltd on September 4, 2024 and sell it today you would earn a total of 372.00 from holding Shoprite Holdings Ltd or generate 28.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoprite Holdings Ltd vs. Dillards
Performance |
| Timeline |
| Shoprite Holdings |
| Dillards |
Shoprite Holdings and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and Dillards
The main advantage of trading using opposite Shoprite Holdings and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings 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.| Shoprite Holdings vs. Sanlam Ltd PK | Shoprite Holdings vs. Vodacom Group Ltd | Shoprite Holdings vs. Woolworths Holdings Ltd | Shoprite Holdings vs. Standard Bank Group |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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