Correlation Between DICKS Sporting and EMBARK EDUCATION

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

Diversification Opportunities for DICKS Sporting and EMBARK EDUCATION

0.01

Correlation Coefficient

DICKS Sporting  EMBARK EDUCATION

Significant diversification

The 3 months correlation between DICKS and EMBARK is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and EMBARK EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARK EDUCATION LTD 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 EMBARK EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARK EDUCATION LTD has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and EMBARK EDUCATION go up and down completely randomly.

Pair Corralation between DICKS Sporting and EMBARK EDUCATION

Assuming the 90 days horizon DICKS Sporting Goods is expected to under-perform the EMBARK EDUCATION. In addition to that, DICKS Sporting is 4.23 times more volatile than EMBARK EDUCATION LTD. It trades about -0.08 of its total potential returns per unit of risk. EMBARK EDUCATION LTD is currently generating about 0.0 per unit of volatility. If you would invest  31.00  in EMBARK EDUCATION LTD on December 29, 2024 and sell it today you would earn a total of  0.00  from holding EMBARK EDUCATION LTD or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

DICKS Sporting Goods  vs.  EMBARK EDUCATION LTD

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

EMBARK EDUCATION LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMBARK EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EMBARK EDUCATION is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DICKS Sporting and EMBARK EDUCATION

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

The idea behind DICKS Sporting Goods and EMBARK EDUCATION LTD 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.