Correlation Between Dillards and Parkson Retail

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

By analyzing existing cross correlation between Dillards and Parkson Retail Group, you can compare the effects of market volatilities on Dillards and Parkson Retail 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 Dillards with a short position of Parkson Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Parkson Retail.

Diversification Opportunities for Dillards and Parkson Retail

-0.32

Correlation Coefficient

Dillards  Parkson Retail

Very good diversification

The 3 months correlation between Dillards and Parkson is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Parkson Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkson Retail Group and Dillards 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 Dillards are associated (or correlated) with Parkson Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkson Retail Group has no effect on the direction of Dillards i.e., Dillards and Parkson Retail go up and down completely randomly.

Pair Corralation between Dillards and Parkson Retail

Assuming the 90 days trading horizon Dillards is expected to generate 0.59 times more return on investment than Parkson Retail. However, Dillards is 1.68 times less risky than Parkson Retail. It trades about 0.22 of its potential returns per unit of risk. Parkson Retail Group is currently generating about -0.01 per unit of risk. If you would invest  27,983  in Dillards on April 24, 2025 and sell it today you would earn a total of  11,417  from holding Dillards or generate 40.8% return on investment over 90 days.

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

Dillards  vs.  Parkson Retail Group

Dillards

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dillards reported solid returns over the last few months and may actually be approaching a breakup point.

Parkson Retail Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parkson Retail Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Parkson Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dillards and Parkson Retail

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

The idea behind Dillards and Parkson Retail Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.