Correlation Between Advance Auto and Dicks Sporting

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Dicks Sporting 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 Advance Auto and Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and Dicks Sporting Goods, you can compare the effects of market volatilities on Advance Auto and Dicks Sporting 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 Advance Auto with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Dicks Sporting.

Diversification Opportunities for Advance Auto and Dicks Sporting

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Advance and Dicks is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods and Advance Auto 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 Advance Auto Parts are associated (or correlated) with Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of Advance Auto i.e., Advance Auto and Dicks Sporting go up and down completely randomly.

Pair Corralation between Advance Auto and Dicks Sporting

Considering the 90-day investment horizon Advance Auto Parts is expected to generate 0.5 times more return on investment than Dicks Sporting. However, Advance Auto Parts is 2.0 times less risky than Dicks Sporting. It trades about 0.73 of its potential returns per unit of risk. Dicks Sporting Goods is currently generating about 0.31 per unit of risk. If you would invest  6,475  in Advance Auto Parts on December 29, 2023 and sell it today you would earn a total of  2,057  from holding Advance Auto Parts or generate 31.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Advance Auto Parts  vs.  Dicks Sporting Goods

 Performance 
       Timeline  
Advance Auto Parts 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Advance Auto Parts are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Advance Auto reported solid returns over the last few months and may actually be approaching a breakup point.
Dicks Sporting Goods 

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward-looking signals, Dicks Sporting unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advance Auto and Dicks Sporting Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advance Auto and Dicks Sporting

The main advantage of trading using opposite Advance Auto and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Dicks Sporting 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 Dicks Sporting will offset losses from the drop in Dicks Sporting's long position.
The idea behind Advance Auto Parts and Dicks Sporting Goods 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

Other Complementary Tools

Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency