Correlation Between Dell Technologies and Chuys Holdings

Can any of the company-specific risk be diversified away by investing in both Dell Technologies and Chuys Holdings 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 Dell Technologies and Chuys Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dell Technologies and Chuys Holdings, you can compare the effects of market volatilities on Dell Technologies and Chuys Holdings 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 Dell Technologies with a short position of Chuys Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dell Technologies and Chuys Holdings.

Diversification Opportunities for Dell Technologies and Chuys Holdings

-0.81

Correlation Coefficient

Dell Technologies  Chuys Holdings

Pay attention - limited upside

The 3 months correlation between Dell and Chuys is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Chuys Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuys Holdings and Dell Technologies 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 Dell Technologies are associated (or correlated) with Chuys Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuys Holdings has no effect on the direction of Dell Technologies i.e., Dell Technologies and Chuys Holdings go up and down completely randomly.

Pair Corralation between Dell Technologies and Chuys Holdings

Given the investment horizon of 90 days Dell Technologies is expected to generate 3.09 times more return on investment than Chuys Holdings. However, Dell Technologies is 3.09 times more volatile than Chuys Holdings. It trades about 0.2 of its potential returns per unit of risk. Chuys Holdings is currently generating about -0.24 per unit of risk. If you would invest  9,289  in Dell Technologies on February 28, 2024 and sell it today you would earn a total of  6,729  from holding Dell Technologies or generate 72.44% return on investment over 90 days.

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

Dell Technologies  vs.  Chuys Holdings

Dell Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Dell Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Chuys Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chuys Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dell Technologies and Chuys Holdings

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

The idea behind Dell Technologies and Chuys Holdings 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 the Bonds Directory module to find actively traded corporate debentures issued by US companies.