Correlation Between DICKS Sporting and ASM International

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

Diversification Opportunities for DICKS Sporting and ASM International

0.59

Correlation Coefficient

DICKS Sporting  ASM International

Very weak diversification

The 3 months correlation between DICKS and ASM is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and ASM International NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASM International 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 ASM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASM International has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and ASM International go up and down completely randomly.

Pair Corralation between DICKS Sporting and ASM International

Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 1.31 times more return on investment than ASM International. However, DICKS Sporting is 1.31 times more volatile than ASM International NV. It trades about 0.15 of its potential returns per unit of risk. ASM International NV is currently generating about 0.15 per unit of risk. If you would invest  18,655  in DICKS Sporting Goods on October 26, 2024 and sell it today you would earn a total of  4,645  from holding DICKS Sporting Goods or generate 24.9% return on investment over 90 days.

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

DICKS Sporting Goods  vs.  ASM International NV

DICKS Sporting Goods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DICKS Sporting Goods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DICKS Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

ASM International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASM International NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASM International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DICKS Sporting and ASM International

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

The idea behind DICKS Sporting Goods and ASM International NV 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.