Correlation Between Exxon and Dicks Sporting

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

Diversification Opportunities for Exxon and Dicks Sporting

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Exxon and Dicks is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and Dicks Sporting go up and down completely randomly.

Pair Corralation between Exxon and Dicks Sporting

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.66 times more return on investment than Dicks Sporting. However, Exxon Mobil Corp is 1.52 times less risky than Dicks Sporting. It trades about 0.12 of its potential returns per unit of risk. Dicks Sporting Goods is currently generating about 0.02 per unit of risk. If you would invest  6,021  in Exxon Mobil Corp on September 5, 2022 and sell it today you would earn a total of  4,965  from holding Exxon Mobil Corp or generate 82.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Exxon Mobil Corp  vs.  Dicks Sporting Goods

 Performance (%) 
       Timeline  
Exxon Mobil Corp 
Exxon Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Exxon revealed solid returns over the last few months and may actually be approaching a breakup point.

Exxon Price Channel

Dicks Sporting Goods 
Dicks Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 5 (%) 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

Exxon and Dicks Sporting Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and Dicks Sporting

The main advantage of trading using opposite Exxon and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.
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The idea behind Exxon Mobil Corp 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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