Correlation Between Dicks Sporting and Sportsmans

Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Sportsmans 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 Sportsmans 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 Sportsmans, you can compare the effects of market volatilities on Dicks Sporting and Sportsmans 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 Sportsmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Sportsmans.

Diversification Opportunities for Dicks Sporting and Sportsmans

0.71

Correlation Coefficient

Dicks Sporting  Sportsmans

Poor diversification

The 3 months correlation between Dicks and Sportsmans is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans 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 Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Sportsmans go up and down completely randomly.

Pair Corralation between Dicks Sporting and Sportsmans

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.54 times more return on investment than Sportsmans. However, Dicks Sporting Goods is 1.87 times less risky than Sportsmans. It trades about -0.08 of its potential returns per unit of risk. Sportsmans is currently generating about -0.35 per unit of risk. If you would invest  23,040  in Dicks Sporting Goods on December 29, 2024 and sell it today you would lose (2,843) from holding Dicks Sporting Goods or give up 12.34% of portfolio value over 90 days.

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

Dicks Sporting Goods  vs.  Sportsmans

Dicks Sporting Goods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dicks Sporting Goods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sportsmans

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sportsmans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Dicks Sporting and Sportsmans

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

The idea behind Dicks Sporting Goods and Sportsmans 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.