Correlation Between DICKS Sporting and Compugroup Medical

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

Diversification Opportunities for DICKS Sporting and Compugroup Medical

0.52

Correlation Coefficient

DICKS Sporting  Compugroup Medical

Very weak diversification

The 3 months correlation between DICKS and Compugroup is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and Compugroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugroup Medical 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 Compugroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugroup Medical has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and Compugroup Medical go up and down completely randomly.

Pair Corralation between DICKS Sporting and Compugroup Medical

Assuming the 90 days horizon DICKS Sporting is expected to generate 7.65 times less return on investment than Compugroup Medical. But when comparing it to its historical volatility, DICKS Sporting Goods is 2.03 times less risky than Compugroup Medical. It trades about 0.04 of its potential returns per unit of risk. Compugroup Medical SE is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,391  in Compugroup Medical SE on September 13, 2024 and sell it today you would earn a total of  773.00  from holding Compugroup Medical SE or generate 55.57% 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.  Compugroup Medical SE

DICKS Sporting Goods

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DICKS Sporting Goods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DICKS Sporting may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Compugroup Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compugroup Medical SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compugroup Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DICKS Sporting and Compugroup Medical

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

The idea behind DICKS Sporting Goods and Compugroup Medical SE 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.