Correlation Between Dillards and Dillards Capital

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

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

Diversification Opportunities for Dillards and Dillards Capital

-0.4

Correlation Coefficient

Dillards  Dillards Capital

Very good diversification

The 3 months correlation between Dillards and Dillards is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Dillards Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards Capital Trust 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 Dillards Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards Capital Trust has no effect on the direction of Dillards i.e., Dillards and Dillards Capital go up and down completely randomly.

Pair Corralation between Dillards and Dillards Capital

Considering the 90-day investment horizon Dillards is expected to under-perform the Dillards Capital. In addition to that, Dillards is 7.97 times more volatile than Dillards Capital Trust. It trades about -0.12 of its total potential returns per unit of risk. Dillards Capital Trust is currently generating about 0.09 per unit of volatility. If you would invest  2,535  in Dillards Capital Trust on December 29, 2024 and sell it today you would earn a total of  46.00  from holding Dillards Capital Trust or generate 1.81% return on investment over 90 days.

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

Dillards  vs.  Dillards Capital Trust

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.

Dillards Capital Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dillards Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dillards and Dillards Capital

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

The idea behind Dillards and Dillards Capital Trust 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.