Correlation Between Dentsply Sirona and Dicks Sporting

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Can any of the company-specific risk be diversified away by investing in both Dentsply Sirona and Dicks Sporting 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 Dentsply Sirona and Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dentsply Sirona and Dicks Sporting Goods, you can compare the effects of market volatilities on Dentsply Sirona and Dicks Sporting 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 Dentsply Sirona with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dentsply Sirona and Dicks Sporting.

Diversification Opportunities for Dentsply Sirona and Dicks Sporting

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dentsply and Dicks is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods and Dentsply Sirona 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 Dentsply Sirona are associated (or correlated) with Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and Dicks Sporting go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Dicks Sporting

Given the investment horizon of 90 days Dentsply Sirona is expected to under-perform the Dicks Sporting. But the stock apears to be less risky and, when comparing its historical volatility, Dentsply Sirona is 2.62 times less risky than Dicks Sporting. The stock trades about -0.02 of its potential returns per unit of risk. The Dicks Sporting Goods is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  17,710  in Dicks Sporting Goods on December 29, 2023 and sell it today you would earn a total of  4,549  from holding Dicks Sporting Goods or generate 25.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Dentsply Sirona  vs.  Dicks Sporting Goods

 Performance 
       Timeline  
Dentsply Sirona 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dentsply Sirona is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Dicks Sporting Goods 

Risk-Adjusted Performance

23 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 23 (%) 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.

Dentsply Sirona and Dicks Sporting Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dentsply Sirona and Dicks Sporting

The main advantage of trading using opposite Dentsply Sirona and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona position performs unexpectedly, Dicks Sporting 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 Dicks Sporting will offset losses from the drop in Dicks Sporting's long position.
The idea behind Dentsply Sirona and Dicks Sporting Goods 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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