Correlation Between Charter Communications and DFS Furniture

Can any of the company-specific risk be diversified away by investing in both Charter Communications and DFS Furniture 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 Charter Communications and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications and DFS Furniture PLC, you can compare the effects of market volatilities on Charter Communications and DFS Furniture 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 Charter Communications with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and DFS Furniture.

Diversification Opportunities for Charter Communications and DFS Furniture

0.69

Correlation Coefficient

Charter Communications  DFS Furniture

Poor diversification

The 3 months correlation between Charter and DFS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Charter Communications 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 Charter Communications are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Charter Communications i.e., Charter Communications and DFS Furniture go up and down completely randomly.

Pair Corralation between Charter Communications and DFS Furniture

Assuming the 90 days trading horizon Charter Communications is expected to generate 2.18 times less return on investment than DFS Furniture. In addition to that, Charter Communications is 1.2 times more volatile than DFS Furniture PLC. It trades about 0.09 of its total potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.24 per unit of volatility. If you would invest  147.00  in DFS Furniture PLC on April 20, 2025 and sell it today you would earn a total of  51.00  from holding DFS Furniture PLC or generate 34.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Charter Communications  vs.  DFS Furniture PLC

Charter Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

DFS Furniture PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DFS Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and DFS Furniture

The main advantage of trading using opposite Charter Communications and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.

The idea behind Charter Communications and DFS Furniture PLC 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.