Correlation Between Tokyu Corp and Dillards

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

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

Diversification Opportunities for Tokyu Corp and Dillards

-0.2

Correlation Coefficient

Tokyu Corp  Dillards

Good diversification

The 3 months correlation between Tokyu and Dillards is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu Corp ADR and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and Tokyu Corp 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 Tokyu Corp ADR 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 Tokyu Corp i.e., Tokyu Corp and Dillards go up and down completely randomly.

Pair Corralation between Tokyu Corp and Dillards

Assuming the 90 days horizon Tokyu Corp ADR is expected to under-perform the Dillards. But the pink sheet apears to be less risky and, when comparing its historical volatility, Tokyu Corp ADR is 1.02 times less risky than Dillards. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Dillards is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  33,674  in Dillards on October 5, 2024 and sell it today you would earn a total of  11,397  from holding Dillards or generate 33.85% return on investment over 90 days.

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

Tokyu Corp ADR  vs.  Dillards

Tokyu Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokyu Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Dillards unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tokyu Corp and Dillards

The main advantage of trading using opposite Tokyu Corp and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyu Corp 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 Tokyu Corp ADR 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.