Correlation Between Dillards and Aquagold International

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

By analyzing existing cross correlation between Dillards and Aquagold International, you can compare the effects of market volatilities on Dillards and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Aquagold International.

Diversification Opportunities for Dillards and Aquagold International

-0.04

Correlation Coefficient

Dillards  Aquagold International

Good diversification

The 3 months correlation between Dillards and Aquagold is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Dillards i.e., Dillards and Aquagold International go up and down completely randomly.

Pair Corralation between Dillards and Aquagold International

Considering the 90-day investment horizon Dillards is expected to generate 0.4 times more return on investment than Aquagold International. However, Dillards is 2.5 times less risky than Aquagold International. It trades about -0.14 of its potential returns per unit of risk. Aquagold International is currently generating about -0.13 per unit of risk. If you would invest  44,383  in Dillards on December 22, 2024 and sell it today you would lose (9,058) from holding Dillards or give up 20.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Dillards  vs.  Aquagold International

Dillards

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dillards has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Dillards and Aquagold International

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

The idea behind Dillards and Aquagold International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.