Correlation Between Almacenes Xito and Dillards

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

By analyzing existing cross correlation between Almacenes xito SA and Dillards, you can compare the effects of market volatilities on Almacenes Xito and Dillards 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 Almacenes Xito with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almacenes Xito and Dillards.

Diversification Opportunities for Almacenes Xito and Dillards

0.08

Correlation Coefficient

Almacenes Xito  Dillards

Significant diversification

The 3 months correlation between Almacenes and Dillards is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Almacenes xito SA and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Almacenes Xito 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 Almacenes xito SA are associated (or correlated) with Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Almacenes Xito i.e., Almacenes Xito and Dillards go up and down completely randomly.

Pair Corralation between Almacenes Xito and Dillards

Given the investment horizon of 90 days Almacenes xito SA is expected to generate 1.24 times more return on investment than Dillards. However, Almacenes Xito is 1.24 times more volatile than Dillards. It trades about 0.0 of its potential returns per unit of risk. Dillards is currently generating about -0.12 per unit of risk. If you would invest  357.00  in Almacenes xito SA on December 27, 2024 and sell it today you would lose (10.00) from holding Almacenes xito SA or give up 2.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Almacenes xito SA  vs.  Dillards

Almacenes xito SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Almacenes xito SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Almacenes Xito is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Dillards

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dillards has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Almacenes Xito and Dillards

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

The idea behind Almacenes xito SA and Dillards 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.