Correlation Between Lands End and Dicks Sporting

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Can any of the company-specific risk be diversified away by investing in both Lands End and Dicks Sporting 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 Lands End and Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lands End and Dicks Sporting Goods, you can compare the effects of market volatilities on Lands End and Dicks Sporting 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 Lands End with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lands End and Dicks Sporting.

Diversification Opportunities for Lands End and Dicks Sporting

-0.25
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Lands End and Dicks Sporting

Allowing for the 90-day total investment horizon Lands End is expected to generate 2.03 times less return on investment than Dicks Sporting. In addition to that, Lands End is 1.69 times more volatile than Dicks Sporting Goods. It trades about 0.08 of its total potential returns per unit of risk. Dicks Sporting Goods is currently generating about 0.28 per unit of volatility. If you would invest  10,555  in Dicks Sporting Goods on December 29, 2023 and sell it today you would earn a total of  11,704  from holding Dicks Sporting Goods or generate 110.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lands End  vs.  Dicks Sporting Goods

 Performance 
       Timeline  
Lands End 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Lands End may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Dicks Sporting Goods 

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 22 (%) 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 and Dicks Sporting Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lands End and Dicks Sporting

The main advantage of trading using opposite Lands End and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End position performs unexpectedly, Dicks Sporting 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 Dicks Sporting will offset losses from the drop in Dicks Sporting's long position.
The idea behind Lands End and Dicks Sporting Goods 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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