Correlation Between Dillards and Arhaus

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

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

Diversification Opportunities for Dillards and Arhaus

0.82

Correlation Coefficient

Dillards  Arhaus

Very poor diversification

The 3 months correlation between Dillards and Arhaus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc 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 Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Dillards i.e., Dillards and Arhaus go up and down completely randomly.

Pair Corralation between Dillards and Arhaus

Considering the 90-day investment horizon Dillards is expected to under-perform the Arhaus. But the stock apears to be less risky and, when comparing its historical volatility, Dillards is 1.65 times less risky than Arhaus. The stock trades about -0.1 of its potential returns per unit of risk. The Arhaus Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  928.00  in Arhaus Inc on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Arhaus Inc or generate 1.08% return on investment over 90 days.

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

Dillards  vs.  Arhaus Inc

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.

Arhaus Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, Arhaus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dillards and Arhaus

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

The idea behind Dillards and Arhaus Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.