Correlation Between Dicks Sporting and Lands End

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Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Lands End 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 Lands End 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 Lands End, you can compare the effects of market volatilities on Dicks Sporting and Lands End 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 Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Lands End.

Diversification Opportunities for Dicks Sporting and Lands End

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Dicks and Lands is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Lands End go up and down completely randomly.

Pair Corralation between Dicks Sporting and Lands End

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.92 times more return on investment than Lands End. However, Dicks Sporting Goods is 1.08 times less risky than Lands End. It trades about 0.31 of its potential returns per unit of risk. Lands End is currently generating about 0.14 per unit of risk. If you would invest  17,710  in Dicks Sporting Goods on December 29, 2023 and sell it today you would earn a total of  4,549  from holding Dicks Sporting Goods or generate 25.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Dicks Sporting Goods  vs.  Lands End

 Performance 
       Timeline  
Dicks Sporting Goods 

Risk-Adjusted Performance

23 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 23 (%) 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.
Lands End 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Lands End exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dicks Sporting and Lands End Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dicks Sporting and Lands End

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

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