Correlation Between DFS Furniture and Pets At

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

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

Diversification Opportunities for DFS Furniture and Pets At

0.93

Correlation Coefficient

DFS Furniture  Pets At

Almost no diversification

The 3 months correlation between DFS and Pets is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of DFS Furniture i.e., DFS Furniture and Pets At go up and down completely randomly.

Pair Corralation between DFS Furniture and Pets At

Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.2 times more return on investment than Pets At. However, DFS Furniture is 1.2 times more volatile than Pets at Home. It trades about 0.27 of its potential returns per unit of risk. Pets at Home is currently generating about 0.23 per unit of risk. If you would invest  12,600  in DFS Furniture PLC on April 5, 2025 and sell it today you would earn a total of  4,100  from holding DFS Furniture PLC or generate 32.54% return on investment over 90 days.

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

DFS Furniture PLC  vs.  Pets at Home

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 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, DFS Furniture exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pets at Home

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pets at Home are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pets At unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DFS Furniture and Pets At

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

The idea behind DFS Furniture PLC and Pets at Home 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.