Correlation Between Dicks Sporting and Envela Corp

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

Diversification Opportunities for Dicks Sporting and Envela Corp

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Dicks and Envela is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp and Dicks Sporting 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 Dicks Sporting Goods are associated (or correlated) with Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Envela Corp go up and down completely randomly.

Pair Corralation between Dicks Sporting and Envela Corp

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.82 times more return on investment than Envela Corp. However, Dicks Sporting Goods is 1.22 times less risky than Envela Corp. It trades about -0.03 of its potential returns per unit of risk. Envela Corp is currently generating about -0.68 per unit of risk. If you would invest  10,674  in Dicks Sporting Goods on June 27, 2022 and sell it today you would lose (228.00)  from holding Dicks Sporting Goods or give up 2.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dicks Sporting Goods  vs.  Envela Corp

 Performance (%) 
       Timeline  
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 unsteady forward-looking signals, Dicks Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

Dicks Price Channel

Envela Corp 
Envela Performance
0 of 100
Over the last 90 days Envela Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Envela Price Channel

Dicks Sporting and Envela Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dicks Sporting and Envela Corp

The main advantage of trading using opposite Dicks Sporting and Envela Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Envela Corp 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 Envela Corp will offset losses from the drop in Envela Corp's long position.
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The idea behind Dicks Sporting Goods and Envela Corp 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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