Correlation Between DICKS Sporting and Vale SA

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

Diversification Opportunities for DICKS Sporting and Vale SA

0.0

Correlation Coefficient

DICKS Sporting  Vale SA

Pay attention - limited upside

The 3 months correlation between DICKS and Vale is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and Vale SA go up and down completely randomly.

Pair Corralation between DICKS Sporting and Vale SA

If you would invest  18,535  in DICKS Sporting Goods on October 4, 2024 and sell it today you would earn a total of  3,540  from holding DICKS Sporting Goods or generate 19.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

DICKS Sporting Goods  vs.  Vale SA

DICKS Sporting Goods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DICKS Sporting Goods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, DICKS Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DICKS Sporting and Vale SA

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

The idea behind DICKS Sporting Goods and Vale SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.