Correlation Between Associated Capital and Dillards Capital

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

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

Diversification Opportunities for Associated Capital and Dillards Capital

0.82

Correlation Coefficient

Associated Capital  Dillards Capital

Very poor diversification

The 3 months correlation between Associated and Dillards is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Dillards Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards Capital Trust and Associated 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 Associated Capital Group are associated (or correlated) with Dillards Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards Capital Trust has no effect on the direction of Associated Capital i.e., Associated Capital and Dillards Capital go up and down completely randomly.

Pair Corralation between Associated Capital and Dillards Capital

Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 5.79 times more return on investment than Dillards Capital. However, Associated Capital is 5.79 times more volatile than Dillards Capital Trust. It trades about 0.12 of its potential returns per unit of risk. Dillards Capital Trust is currently generating about 0.16 per unit of risk. If you would invest  3,143  in Associated Capital Group on September 3, 2024 and sell it today you would earn a total of  458.00  from holding Associated Capital Group or generate 14.57% return on investment over 90 days.

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

Associated Capital Group  vs.  Dillards Capital Trust

Associated Capital

Risk-Adjusted Performance

9 of 100

OK

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

Dillards Capital Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 12 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Associated Capital and Dillards Capital

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

The idea behind Associated Capital Group and Dillards Capital Trust 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.