Correlation Between Dillards and Big Lots
Can any of the company-specific risk be diversified away by investing in both Dillards and Big Lots 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 Dillards and Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and Big Lots, you can compare the effects of market volatilities on Dillards and Big Lots 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 Dillards with a short position of Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Big Lots.
Diversification Opportunities for Dillards and Big Lots
Excellent diversification
The 3 months correlation between Dillards and Big is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and Dillards 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 Dillards are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Dillards i.e., Dillards and Big Lots go up and down completely randomly.
Pair Corralation between Dillards and Big Lots
Considering the 90-day investment horizon Dillards is expected to under-perform the Big Lots. But the stock apears to be less risky and, when comparing its historical volatility, Dillards is 2.11 times less risky than Big Lots. The stock trades about -0.06 of its potential returns per unit of risk. The Big Lots is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 362.00 in Big Lots on January 18, 2024 and sell it today you would lose (19.00) from holding Big Lots or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dillards vs. Big Lots
Performance |
| Timeline |
| Dillards |
| Big Lots |
Dillards and Big Lots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dillards and Big Lots
The main advantage of trading using opposite Dillards and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.| Dillards vs. Nordstrom | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer | Dillards vs. Kohls Corp |
| Big Lots vs. BJs Wholesale Club | Big Lots vs. Dollar General | Big Lots vs. Costco Wholesale Corp | Big Lots vs. Walmart |
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 the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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