Correlation Between Dicks Sporting and Verizon Communications

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Verizon Communications 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 Verizon Communications 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 Verizon Communications, you can compare the effects of market volatilities on Dicks Sporting and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Verizon Communications.

Diversification Opportunities for Dicks Sporting and Verizon Communications

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dicks and Verizon is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Verizon Communications go up and down completely randomly.

Pair Corralation between Dicks Sporting and Verizon Communications

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 1.8 times more return on investment than Verizon Communications. However, Dicks Sporting is 1.8 times more volatile than Verizon Communications. It trades about 0.35 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.18 per unit of risk. If you would invest  7,530  in Dicks Sporting Goods on May 20, 2022 and sell it today you would earn a total of  3,717  from holding Dicks Sporting Goods or generate 49.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dicks Sporting Goods  vs.  Verizon Communications

 Performance (%) 
       Timeline  
Dicks Sporting Goods 
Dicks Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish forward-looking signals, Dicks Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

Dicks Price Channel

Verizon Communications 
Verizon Performance
0 of 100
Over the last 90 days Verizon Communications 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Verizon Price Channel

Dicks Sporting and Verizon Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dicks Sporting and Verizon Communications

The main advantage of trading using opposite Dicks Sporting and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.
The idea behind Dicks Sporting Goods and Verizon Communications 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go