Correlation Between Dollar Tree and Fastly
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Fastly 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 Dollar Tree and Fastly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Fastly Inc Cl, you can compare the effects of market volatilities on Dollar Tree and Fastly 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 Dollar Tree with a short position of Fastly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Fastly.
Diversification Opportunities for Dollar Tree and Fastly
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dollar and Fastly is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Fastly Inc Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastly Inc Cl and Dollar Tree 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 Dollar Tree are associated (or correlated) with Fastly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastly Inc Cl has no effect on the direction of Dollar Tree i.e., Dollar Tree and Fastly go up and down completely randomly.
Pair Corralation between Dollar Tree and Fastly
Assuming the 90 days trading horizon Dollar Tree is expected to under-perform the Fastly. But the stock apears to be less risky and, when comparing its historical volatility, Dollar Tree is 1.96 times less risky than Fastly. The stock trades about -0.04 of its potential returns per unit of risk. The Fastly Inc Cl is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 954.00 in Fastly Inc Cl on September 2, 2024 and sell it today you would lose (135.00) from holding Fastly Inc Cl or give up 14.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.61% |
| Values | Daily Returns |
Dollar Tree vs. Fastly Inc Cl
Performance |
| Timeline |
| Dollar Tree |
| Fastly Inc Cl |
Dollar Tree and Fastly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Fastly
The main advantage of trading using opposite Dollar Tree and Fastly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Fastly 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 Fastly will offset losses from the drop in Fastly's long position.| Dollar Tree vs. Smithson Investment Trust | Dollar Tree vs. Primary Health Properties | Dollar Tree vs. Taylor Maritime Investments | Dollar Tree vs. Schroders Investment Trusts |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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