Correlation Between Dicks Sporting and Winnebago Industries
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and Winnebago Industries 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 Winnebago Industries 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 Winnebago Industries, you can compare the effects of market volatilities on Dicks Sporting and Winnebago Industries 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 Winnebago Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and Winnebago Industries.
Diversification Opportunities for Dicks Sporting and Winnebago Industries
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dicks and Winnebago is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Winnebago Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winnebago Industries 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 Winnebago Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winnebago Industries has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Winnebago Industries go up and down completely randomly.
Pair Corralation between Dicks Sporting and Winnebago Industries
Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.81 times more return on investment than Winnebago Industries. However, Dicks Sporting Goods is 1.23 times less risky than Winnebago Industries. It trades about -0.16 of its potential returns per unit of risk. Winnebago Industries is currently generating about -0.2 per unit of risk. If you would invest 21,744 in Dicks Sporting Goods on January 26, 2024 and sell it today you would lose (1,196) from holding Dicks Sporting Goods or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicks Sporting Goods vs. Winnebago Industries
Performance |
| Timeline |
| Dicks Sporting Goods |
| Winnebago Industries |
Dicks Sporting and Winnebago Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and Winnebago Industries
The main advantage of trading using opposite Dicks Sporting and Winnebago Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting position performs unexpectedly, Winnebago Industries 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 Winnebago Industries will offset losses from the drop in Winnebago Industries' long position.| Dicks Sporting vs. Target | Dicks Sporting vs. Lowes Companies | Dicks Sporting vs. Kohls Corp | Dicks Sporting vs. Gap Inc |
| Winnebago Industries vs. Twin Vee Powercats | Winnebago Industries vs. Curtiss Motorcycles | Winnebago Industries vs. Marine Products | Winnebago Industries vs. MCBC Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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