Correlation Between Henderson Investment and Dillards

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

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

Diversification Opportunities for Henderson Investment and Dillards

-0.64

Correlation Coefficient

Henderson Investment  Dillards

Excellent diversification

The 3 months correlation between Henderson and Dillards is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Investment Ltd and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Henderson Investment 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 Henderson Investment Ltd 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 Henderson Investment i.e., Henderson Investment and Dillards go up and down completely randomly.

Pair Corralation between Henderson Investment and Dillards

Assuming the 90 days horizon Henderson Investment Ltd is expected to under-perform the Dillards. In addition to that, Henderson Investment is 6.79 times more volatile than Dillards. It trades about -0.23 of its total potential returns per unit of risk. Dillards is currently generating about 0.24 per unit of volatility. If you would invest  41,281  in Dillards on October 8, 2024 and sell it today you would earn a total of  4,438  from holding Dillards or generate 10.75% return on investment over 90 days.

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

Henderson Investment Ltd  vs.  Dillards

Henderson Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson Investment Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dillards

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Dillards unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Henderson Investment and Dillards

The main advantage of trading using opposite Henderson Investment and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Investment 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 Henderson Investment Ltd 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.