Correlation Between Dillards and Marks Spencer

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

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

Diversification Opportunities for Dillards and Marks Spencer

-0.38

Correlation Coefficient

Dillards  Marks Spencer

Very good diversification

The 3 months correlation between Dillards and Marks is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Marks Spencer Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks Spencer Group 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 Spencer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks Spencer Group has no effect on the direction of Dillards i.e., Dillards and Marks Spencer go up and down completely randomly.

Pair Corralation between Dillards and Marks Spencer

Considering the 90-day investment horizon Dillards is expected to under-perform the Marks Spencer. But the stock apears to be less risky and, when comparing its historical volatility, Dillards is 1.01 times less risky than Marks Spencer. The stock trades about -0.1 of its potential returns per unit of risk. The Marks Spencer Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  948.00  in Marks Spencer Group on December 29, 2024 and sell it today you would lose (8.00) from holding Marks Spencer Group or give up 0.84% of portfolio value over 90 days.

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

Dillards  vs.  Marks Spencer Group

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.

Marks Spencer Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marks Spencer Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marks Spencer is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dillards and Marks Spencer

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

The idea behind Dillards and Marks Spencer Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.