Correlation Between Dixons Carphone and Under Armour

Can any of the company-specific risk be diversified away by investing in both Dixons Carphone and Under Armour 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 Dixons Carphone and Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dixons Carphone plc and Under Armour C, you can compare the effects of market volatilities on Dixons Carphone and Under Armour 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 Dixons Carphone with a short position of Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixons Carphone and Under Armour.

Diversification Opportunities for Dixons Carphone and Under Armour

-0.73

Correlation Coefficient

Dixons Carphone  Under Armour

Pay attention - limited upside

The 3 months correlation between Dixons and Under is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C and Dixons Carphone 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 Dixons Carphone plc are associated (or correlated) with Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of Dixons Carphone i.e., Dixons Carphone and Under Armour go up and down completely randomly.

Pair Corralation between Dixons Carphone and Under Armour

Assuming the 90 days horizon Dixons Carphone plc is expected to generate 0.5 times more return on investment than Under Armour. However, Dixons Carphone plc is 2.02 times less risky than Under Armour. It trades about 0.11 of its potential returns per unit of risk. Under Armour C is currently generating about -0.02 per unit of risk. If you would invest  107.00  in Dixons Carphone plc on October 6, 2024 and sell it today you would earn a total of  11.00  from holding Dixons Carphone plc or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.35%
Values	Daily Returns

Dixons Carphone plc  vs.  Under Armour C

Dixons Carphone plc

Risk-Adjusted Performance

1 of 100

Weak

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

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Under Armour is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dixons Carphone and Under Armour

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

The idea behind Dixons Carphone plc and Under Armour C 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.