Correlation Between Sears Canada and Dillards
Can any of the company-specific risk be diversified away by investing in both Sears Canada 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 Sears Canada and Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sears Canada and Dillards, you can compare the effects of market volatilities on Sears Canada 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 Sears Canada with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sears Canada and Dillards.
Diversification Opportunities for Sears Canada and Dillards
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sears and Dillards is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sears Canada and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Sears Canada 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 Sears Canada 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 Sears Canada i.e., Sears Canada and Dillards go up and down completely randomly.
Pair Corralation between Sears Canada and Dillards
If you would invest 31,954 in Dillards on August 31, 2024 and sell it today you would earn a total of 12,358 from holding Dillards or generate 38.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.27% |
| Values | Daily Returns |
Sears Canada vs. Dillards
Performance |
| Timeline |
| Sears Canada |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dillards |
Sears Canada and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sears Canada and Dillards
The main advantage of trading using opposite Sears Canada and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sears Canada 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 Sears Canada 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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