Correlation Between Marks and Dillards Capital

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

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

Diversification Opportunities for Marks and Dillards Capital

-0.22

Correlation Coefficient

Marks  Dillards Capital

Very good diversification

The 3 months correlation between Marks and Dillards is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Marks and Spencer and Dillards Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards Capital Trust and Marks 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 Marks and Spencer are associated (or correlated) with Dillards Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards Capital Trust has no effect on the direction of Marks i.e., Marks and Dillards Capital go up and down completely randomly.

Pair Corralation between Marks and Dillards Capital

Assuming the 90 days horizon Marks and Spencer is expected to under-perform the Dillards Capital. In addition to that, Marks is 10.65 times more volatile than Dillards Capital Trust. It trades about -0.04 of its total potential returns per unit of risk. Dillards Capital Trust is currently generating about 0.09 per unit of volatility. If you would invest  2,535  in Dillards Capital Trust on December 30, 2024 and sell it today you would earn a total of  46.00  from holding Dillards Capital Trust or generate 1.81% return on investment over 90 days.

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

Marks and Spencer  vs.  Dillards Capital Trust

Marks and Spencer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marks and Spencer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Dillards Capital Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dillards Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Marks and Dillards Capital

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

The idea behind Marks and Spencer and Dillards Capital Trust 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.