Correlation Between DICKS Sporting and First Majestic

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

Diversification Opportunities for DICKS Sporting and First Majestic

-0.42

Correlation Coefficient

DICKS Sporting  First Majestic

Very good diversification

The 3 months correlation between DICKS and First is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and First Majestic go up and down completely randomly.

Pair Corralation between DICKS Sporting and First Majestic

Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 0.7 times more return on investment than First Majestic. However, DICKS Sporting Goods is 1.42 times less risky than First Majestic. It trades about 0.1 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.03 per unit of risk. If you would invest  12,311  in DICKS Sporting Goods on October 8, 2024 and sell it today you would earn a total of  9,434  from holding DICKS Sporting Goods or generate 76.63% return on investment over 90 days.

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

DICKS Sporting Goods  vs.  First Majestic Silver

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 fragile basic indicators, DICKS Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

First Majestic Silver

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, First Majestic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DICKS Sporting and First Majestic

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

The idea behind DICKS Sporting Goods and First Majestic Silver 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.