Correlation Between Dillards Capital and Marks Spencer

Can any of the company-specific risk be diversified away by investing in both Dillards Capital and Marks Spencer 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 Capital and Marks Spencer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dillards Capital Trust and Marks Spencer Group, you can compare the effects of market volatilities on Dillards Capital and Marks Spencer 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 Capital with a short position of Marks Spencer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards Capital and Marks Spencer.

Diversification Opportunities for Dillards Capital and Marks Spencer

0.31

Correlation Coefficient

Dillards Capital  Marks Spencer

Weak diversification

The 3 months correlation between Dillards and Marks is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dillards Capital Trust and Marks Spencer Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks Spencer Group and Dillards Capital 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 Capital Trust are associated (or correlated) with Marks Spencer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks Spencer Group has no effect on the direction of Dillards Capital i.e., Dillards Capital and Marks Spencer go up and down completely randomly.

Pair Corralation between Dillards Capital and Marks Spencer

Considering the 90-day investment horizon Dillards Capital is expected to generate 11.11 times less return on investment than Marks Spencer. But when comparing it to its historical volatility, Dillards Capital Trust is 3.76 times less risky than Marks Spencer. It trades about 0.12 of its potential returns per unit of risk. Marks Spencer Group is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  620.00  in Marks Spencer Group on February 17, 2024 and sell it today you would earn a total of  73.00  from holding Marks Spencer Group or generate 11.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dillards Capital Trust  vs.  Marks Spencer Group

Dillards Capital Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dillards Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Marks Spencer Group

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marks Spencer Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Marks Spencer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dillards Capital and Marks Spencer

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

The idea behind Dillards Capital Trust and Marks Spencer Group 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.