Correlation Between Dollar Tree and Kroger
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Kroger 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 Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Kroger Co, you can compare the effects of market volatilities on Dollar Tree and Kroger 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 Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Kroger.
Diversification Opportunities for Dollar Tree and Kroger
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dollar and Kroger is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger 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 Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kroger has no effect on the direction of Dollar Tree i.e., Dollar Tree and Kroger go up and down completely randomly.
Pair Corralation between Dollar Tree and Kroger
Assuming the 90 days trading horizon Dollar Tree is expected to generate 2.63 times more return on investment than Kroger. However, Dollar Tree is 2.63 times more volatile than Kroger Co. It trades about 0.09 of its potential returns per unit of risk. Kroger Co is currently generating about 0.21 per unit of risk. If you would invest 6,676 in Dollar Tree on August 28, 2024 and sell it today you would earn a total of 353.00 from holding Dollar Tree or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. Kroger Co
Performance |
| Timeline |
| Dollar Tree |
| Kroger |
Dollar Tree and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Kroger
The main advantage of trading using opposite Dollar Tree and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Kroger 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 Kroger will offset losses from the drop in Kroger's long position.| Dollar Tree vs. Vitec Software Group | Dollar Tree vs. Ross Stores | Dollar Tree vs. Royal Bank of | Dollar Tree vs. Zegona Communications Plc |
| Kroger vs. AMG Advanced Metallurgical | Kroger vs. JD Sports Fashion | Kroger vs. Various Eateries PLC | Kroger vs. Darden Restaurants |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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