Correlation Between Dillards and SHOPRITE HDGS
Can any of the company-specific risk be diversified away by investing in both Dillards and SHOPRITE HDGS 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 SHOPRITE HDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and SHOPRITE HDGS ADR, you can compare the effects of market volatilities on Dillards and SHOPRITE HDGS 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 SHOPRITE HDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and SHOPRITE HDGS.
Diversification Opportunities for Dillards and SHOPRITE HDGS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dillards and SHOPRITE is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and SHOPRITE HDGS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHOPRITE HDGS ADR 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 SHOPRITE HDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHOPRITE HDGS ADR has no effect on the direction of Dillards i.e., Dillards and SHOPRITE HDGS go up and down completely randomly.
Pair Corralation between Dillards and SHOPRITE HDGS
Assuming the 90 days trading horizon Dillards is expected to generate 1.31 times more return on investment than SHOPRITE HDGS. However, Dillards is 1.31 times more volatile than SHOPRITE HDGS ADR. It trades about 0.2 of its potential returns per unit of risk. SHOPRITE HDGS ADR is currently generating about 0.08 per unit of risk. If you would invest 32,965 in Dillards on September 23, 2024 and sell it today you would earn a total of 8,235 from holding Dillards or generate 24.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dillards vs. SHOPRITE HDGS ADR
Performance |
Timeline |
Dillards |
SHOPRITE HDGS ADR |
Dillards and SHOPRITE HDGS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dillards and SHOPRITE HDGS
The main advantage of trading using opposite Dillards and SHOPRITE HDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards position performs unexpectedly, SHOPRITE HDGS 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 SHOPRITE HDGS will offset losses from the drop in SHOPRITE HDGS's long position.Dillards vs. Aeon Co | Dillards vs. SHOPRITE HDGS ADR | Dillards vs. Shoprite Holdings Limited | Dillards vs. Macys Inc |
SHOPRITE HDGS vs. Aeon Co | SHOPRITE HDGS vs. Shoprite Holdings Limited | SHOPRITE HDGS vs. Dillards | SHOPRITE HDGS vs. Macys Inc |
Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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