Correlation Between Acorn International and Dicks Sporting

Can any of the company-specific risk be diversified away by investing in both Acorn International 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 Acorn International and Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acorn International and Dicks Sporting Goods, you can compare the effects of market volatilities on Acorn International 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 Acorn International with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acorn International and Dicks Sporting.

Diversification Opportunities for Acorn International and Dicks Sporting

0.0

Correlation Coefficient

Acorn International  Dicks Sporting

Pay attention - limited upside

The 3 months correlation between Acorn and Dicks is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Acorn International 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 Acorn International 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 Acorn International 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 Acorn International i.e., Acorn International and Dicks Sporting go up and down completely randomly.

Pair Corralation between Acorn International and Dicks Sporting

If you would invest  17,464  in Dicks Sporting Goods on January 27, 2024 and sell it today you would earn a total of  3,248  from holding Dicks Sporting Goods or generate 18.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Acorn International  vs.  Dicks Sporting Goods

Acorn International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Acorn International is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dicks Sporting Goods

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Dicks Sporting unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acorn International and Dicks Sporting

The main advantage of trading using opposite Acorn International and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acorn International 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 Acorn International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.