Correlation Between Dicks Sporting and MarineMax

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

Diversification Opportunities for Dicks Sporting and MarineMax

-0.22

Correlation Coefficient

Dicks Sporting  MarineMax

Very good diversification

The 3 months correlation between Dicks and MarineMax is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax 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 MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and MarineMax go up and down completely randomly.

Pair Corralation between Dicks Sporting and MarineMax

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 1.08 times more return on investment than MarineMax. However, Dicks Sporting is 1.08 times more volatile than MarineMax. It trades about 0.15 of its potential returns per unit of risk. MarineMax is currently generating about -0.14 per unit of risk. If you would invest  17,464  in Dicks Sporting Goods on January 25, 2024 and sell it today you would earn a total of  3,145  from holding Dicks Sporting Goods or generate 18.01% return on investment over 90 days.

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

Dicks Sporting Goods  vs.  MarineMax

Dicks Sporting Goods

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Dicks Sporting unveiled solid returns over the last few months and may actually be approaching a breakup point.

MarineMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MarineMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MarineMax is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dicks Sporting and MarineMax

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

The idea behind Dicks Sporting Goods and MarineMax 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.