Correlation Between Dillards Capital and Sitka Gold

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

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

Diversification Opportunities for Dillards Capital and Sitka Gold

0.26

Correlation Coefficient

Dillards Capital  Sitka Gold

Modest diversification

The 3 months correlation between Dillards and Sitka is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dillards Capital Trust and Sitka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitka Gold Corp and Dillards Capital 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 Capital Trust are associated (or correlated) with Sitka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitka Gold Corp has no effect on the direction of Dillards Capital i.e., Dillards Capital and Sitka Gold go up and down completely randomly.

Pair Corralation between Dillards Capital and Sitka Gold

Considering the 90-day investment horizon Dillards Capital Trust is expected to generate 0.07 times more return on investment than Sitka Gold. However, Dillards Capital Trust is 14.9 times less risky than Sitka Gold. It trades about 0.0 of its potential returns per unit of risk. Sitka Gold Corp is currently generating about -0.01 per unit of risk. If you would invest  2,576  in Dillards Capital Trust on September 23, 2024 and sell it today you would lose (1.00) from holding Dillards Capital Trust or give up 0.04% of portfolio value over 90 days.

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

Dillards Capital Trust  vs.  Sitka Gold Corp

Dillards Capital Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 2 (%) 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.

Sitka Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sitka Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Sitka Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dillards Capital and Sitka Gold

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

The idea behind Dillards Capital Trust and Sitka Gold Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .