Correlation Between Alimentation Couchen and Dixons Carphone

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

By analyzing existing cross correlation between Alimentation Couchen Tard and Dixons Carphone plc, you can compare the effects of market volatilities on Alimentation Couchen and Dixons Carphone 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 Alimentation Couchen with a short position of Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimentation Couchen and Dixons Carphone.

Diversification Opportunities for Alimentation Couchen and Dixons Carphone

-0.78

Correlation Coefficient

Alimentation Couchen  Dixons Carphone

Pay attention - limited upside

The 3 months correlation between Alimentation and Dixons is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alimentation Couchen Tard and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc and Alimentation Couchen 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 Alimentation Couchen Tard are associated (or correlated) with Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Alimentation Couchen i.e., Alimentation Couchen and Dixons Carphone go up and down completely randomly.

Pair Corralation between Alimentation Couchen and Dixons Carphone

Assuming the 90 days horizon Alimentation Couchen Tard is expected to generate 0.76 times more return on investment than Dixons Carphone. However, Alimentation Couchen Tard is 1.31 times less risky than Dixons Carphone. It trades about 0.04 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.03 per unit of risk. If you would invest  5,517  in Alimentation Couchen Tard on September 13, 2024 and sell it today you would earn a total of  160.00  from holding Alimentation Couchen Tard or generate 2.9% return on investment over 90 days.

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

Alimentation Couchen Tard  vs.  Dixons Carphone plc

Alimentation Couchen Tard

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alimentation Couchen Tard are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alimentation Couchen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dixons Carphone plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dixons Carphone plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dixons Carphone is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alimentation Couchen and Dixons Carphone

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

The idea behind Alimentation Couchen Tard and Dixons Carphone plc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.