Correlation Between Dollar Tree and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Vulcan Materials Co, you can compare the effects of market volatilities on Dollar Tree and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Vulcan Materials.
Diversification Opportunities for Dollar Tree and Vulcan Materials
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollar and Vulcan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Dollar Tree i.e., Dollar Tree and Vulcan Materials go up and down completely randomly.
Pair Corralation between Dollar Tree and Vulcan Materials
Assuming the 90 days trading horizon Dollar Tree is expected to under-perform the Vulcan Materials. In addition to that, Dollar Tree is 1.65 times more volatile than Vulcan Materials Co. It trades about -0.05 of its total potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.07 per unit of volatility. If you would invest 20,386 in Vulcan Materials Co on August 31, 2024 and sell it today you would earn a total of 8,400 from holding Vulcan Materials Co or generate 41.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.86% |
| Values | Daily Returns |
Dollar Tree vs. Vulcan Materials Co
Performance |
| Timeline |
| Dollar Tree |
| Vulcan Materials |
Dollar Tree and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Vulcan Materials
The main advantage of trading using opposite Dollar Tree and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| Dollar Tree vs. Worldwide Healthcare Trust | Dollar Tree vs. Cardinal Health | Dollar Tree vs. Veolia Environnement VE | Dollar Tree vs. Primary Health Properties |
| Vulcan Materials vs. Neometals | Vulcan Materials vs. Coor Service Management | Vulcan Materials vs. Aeorema Communications Plc | Vulcan Materials vs. JLEN Environmental Assets |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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