Correlation Between Dillards and AMCON Distributing

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

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

Diversification Opportunities for Dillards and AMCON Distributing

0.29

Correlation Coefficient

Dillards  AMCON Distributing

Modest diversification

The 3 months correlation between Dillards and AMCON is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Dillards i.e., Dillards and AMCON Distributing go up and down completely randomly.

Pair Corralation between Dillards and AMCON Distributing

Considering the 90-day investment horizon Dillards is expected to under-perform the AMCON Distributing. But the stock apears to be less risky and, when comparing its historical volatility, Dillards is 1.67 times less risky than AMCON Distributing. The stock trades about -0.12 of its potential returns per unit of risk. The AMCON Distributing is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  13,158  in AMCON Distributing on December 28, 2024 and sell it today you would lose (1,258) from holding AMCON Distributing or give up 9.56% of portfolio value over 90 days.

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

Dillards  vs.  AMCON Distributing

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.

AMCON Distributing

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dillards and AMCON Distributing

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

The idea behind Dillards and AMCON Distributing 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.