Correlation Between DICKS Sporting and DOCDATA

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

Diversification Opportunities for DICKS Sporting and DOCDATA

0.36

Correlation Coefficient

DICKS Sporting  DOCDATA

Weak diversification

The 3 months correlation between DICKS and DOCDATA is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA 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 DOCDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCDATA has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and DOCDATA go up and down completely randomly.

Pair Corralation between DICKS Sporting and DOCDATA

Assuming the 90 days horizon DICKS Sporting Goods is expected to under-perform the DOCDATA. In addition to that, DICKS Sporting is 1.01 times more volatile than DOCDATA. It trades about -0.07 of its total potential returns per unit of risk. DOCDATA is currently generating about -0.07 per unit of volatility. If you would invest  40.00  in DOCDATA on December 30, 2024 and sell it today you would lose (5.00) from holding DOCDATA or give up 12.5% of portfolio value over 90 days.

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

DICKS Sporting Goods  vs.  DOCDATA

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DOCDATA

Risk-Adjusted Performance

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with DICKS Sporting and DOCDATA

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

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