Correlation Between Dillards and Marks

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

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

Diversification Opportunities for Dillards and Marks

-0.63

Correlation Coefficient

Dillards  Marks

Excellent diversification

The 3 months correlation between Dillards and Marks is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Dillards i.e., Dillards and Marks go up and down completely randomly.

Pair Corralation between Dillards and Marks

Considering the 90-day investment horizon Dillards is expected to under-perform the Marks. But the stock apears to be less risky and, when comparing its historical volatility, Dillards is 1.42 times less risky than Marks. The stock trades about -0.16 of its potential returns per unit of risk. The Marks and Spencer is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Marks and Spencer on November 28, 2024 and sell it today you would earn a total of  10.00  from holding Marks and Spencer or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Dillards  vs.  Marks and Spencer

Dillards

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Dillards may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Marks and Spencer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marks and Spencer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dillards and Marks

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

The idea behind Dillards and Marks and Spencer 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 Anywhere module to track or share privately all of your investments from the convenience of any device.