Correlation Between Dicks Sporting and 1 800

Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and 1 800 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 Dicks Sporting and 1 800 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dicks Sporting Goods and 1 800 FLOWERSCOM, you can compare the effects of market volatilities on Dicks Sporting and 1 800 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 Dicks Sporting with a short position of 1 800. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and 1 800.

Diversification Opportunities for Dicks Sporting and 1 800

-0.16

Correlation Coefficient

Dicks Sporting  1 800

Good diversification

The 3 months correlation between Dicks and FLWS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and 1 800 FLOWERSCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1 800 FLOWERSCOM and Dicks Sporting 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 Dicks Sporting Goods are associated (or correlated) with 1 800. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1 800 FLOWERSCOM has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and 1 800 go up and down completely randomly.

Pair Corralation between Dicks Sporting and 1 800

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.76 times more return on investment than 1 800. However, Dicks Sporting Goods is 1.32 times less risky than 1 800. It trades about -0.16 of its potential returns per unit of risk. 1 800 FLOWERSCOM is currently generating about -0.34 per unit of risk. If you would invest  21,744  in Dicks Sporting Goods on January 26, 2024 and sell it today you would lose (1,196) from holding Dicks Sporting Goods or give up 5.5% of portfolio value over 90 days.

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

Dicks Sporting Goods  vs.  1 800 FLOWERSCOM

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.

1 800 FLOWERSCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1 800 FLOWERSCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dicks Sporting and 1 800

The main advantage of trading using opposite Dicks Sporting and 1 800 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, 1 800 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 1 800 will offset losses from the drop in 1 800's long position.

The idea behind Dicks Sporting Goods and 1 800 FLOWERSCOM 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.