Correlation Between Advance Auto and Dicks Sporting

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Dicks Sporting 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 Advance Auto and Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and Dicks Sporting Goods, you can compare the effects of market volatilities on Advance Auto and Dicks Sporting 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 Advance Auto with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Dicks Sporting.

Diversification Opportunities for Advance Auto and Dicks Sporting

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Advance and Dicks is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods and Advance Auto 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 Advance Auto Parts are associated (or correlated) with Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of Advance Auto i.e., Advance Auto and Dicks Sporting go up and down completely randomly.

Pair Corralation between Advance Auto and Dicks Sporting

Considering the 90-day investment horizon Advance Auto Parts is expected to under-perform the Dicks Sporting. But the stock apears to be less risky and, when comparing its historical volatility, Advance Auto Parts is 1.71 times less risky than Dicks Sporting. The stock trades about -0.07 of its potential returns per unit of risk. The Dicks Sporting Goods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,577  in Dicks Sporting Goods on July 8, 2022 and sell it today you would earn a total of  607.00  from holding Dicks Sporting Goods or generate 5.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Advance Auto Parts  vs.  Dicks Sporting Goods

 Performance (%) 
       Timeline  
Advance Auto Parts 
Advance Performance
0 of 100
Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Advance Price Channel

Dicks Sporting Goods 
Dicks Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Dicks Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

Dicks Price Channel

Advance Auto and Dicks Sporting Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advance Auto and Dicks Sporting

The main advantage of trading using opposite Advance Auto and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Dicks Sporting 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 Dicks Sporting will offset losses from the drop in Dicks Sporting's long position.
Advance Auto vs. Best Buy Company
The idea behind Advance Auto Parts and Dicks Sporting Goods 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.
Dicks Sporting vs. Best Buy Company
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go