Correlation Between Dicks Sporting and Green River

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

By analyzing existing cross correlation between Dicks Sporting Goods and Green River Gold, you can compare the effects of market volatilities on Dicks Sporting and Green River 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 Dicks Sporting with a short position of Green River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Green River.

Diversification Opportunities for Dicks Sporting and Green River

0.13

Correlation Coefficient

Dicks Sporting  Green River

Average diversification

The 3 months correlation between Dicks and Green is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Green River Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green River Gold and Dicks Sporting 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 Dicks Sporting Goods are associated (or correlated) with Green River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green River Gold has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Green River go up and down completely randomly.

Pair Corralation between Dicks Sporting and Green River

Considering the 90-day investment horizon Dicks Sporting is expected to generate 3.9 times less return on investment than Green River. But when comparing it to its historical volatility, Dicks Sporting Goods is 7.2 times less risky than Green River. It trades about 0.07 of its potential returns per unit of risk. Green River Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.19  in Green River Gold on September 22, 2024 and sell it today you would lose (4.61) from holding Green River Gold or give up 88.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Dicks Sporting Goods  vs.  Green River Gold

Dicks Sporting Goods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Dicks Sporting is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Green River Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Green River Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Green River reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dicks Sporting and Green River

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

The idea behind Dicks Sporting Goods and Green River Gold 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.