Correlation Between Alibaba Group and DICKS Sporting

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

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

Diversification Opportunities for Alibaba Group and DICKS Sporting

0.0

Correlation Coefficient

Alibaba Group  DICKS Sporting

Pay attention - limited upside

The 3 months correlation between Alibaba and DICKS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding 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 Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and DICKS Sporting go up and down completely randomly.

Pair Corralation between Alibaba Group and DICKS Sporting

If you would invest  0.00  in DICKS Sporting Goods, on October 21, 2024 and sell it today you would earn a total of  0.00  from holding DICKS Sporting Goods, or generate 0.0% return on investment over 90 days.

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

Alibaba Group Holding  vs.  DICKS Sporting Goods,

Alibaba Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Alibaba Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DICKS Sporting Goods,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DICKS Sporting Goods, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, DICKS Sporting is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alibaba Group and DICKS Sporting

The main advantage of trading using opposite Alibaba Group and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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 Alibaba Group Holding 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.