Correlation Between Dicks Sporting and Genesco

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

Diversification Opportunities for Dicks Sporting and Genesco

-0.5

Correlation Coefficient

Dicks Sporting  Genesco

Very good diversification

The 3 months correlation between Dicks and Genesco is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco 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 Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Genesco go up and down completely randomly.

Pair Corralation between Dicks Sporting and Genesco

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.73 times more return on investment than Genesco. However, Dicks Sporting Goods is 1.36 times less risky than Genesco. It trades about 0.17 of its potential returns per unit of risk. Genesco is currently generating about -0.04 per unit of risk. If you would invest  15,566  in Dicks Sporting Goods on February 3, 2024 and sell it today you would earn a total of  4,353  from holding Dicks Sporting Goods or generate 27.96% return on investment over 90 days.

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

Dicks Sporting Goods  vs.  Genesco

Dicks Sporting Goods

Risk-Adjusted Performance

13 of 100

Good

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. In spite of comparatively unfluctuating forward-looking signals, Dicks Sporting unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Dicks Sporting and Genesco

The main advantage of trading using opposite Dicks Sporting and Genesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Genesco 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 Genesco will offset losses from the drop in Genesco's long position.

The idea behind Dicks Sporting Goods and Genesco 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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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.