Correlation Between Dollar Tree and Erste Group
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Erste Group 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 Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Erste Group Bank, you can compare the effects of market volatilities on Dollar Tree and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Erste Group.
Diversification Opportunities for Dollar Tree and Erste Group
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollar and Erste is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Dollar Tree i.e., Dollar Tree and Erste Group go up and down completely randomly.
Pair Corralation between Dollar Tree and Erste Group
Assuming the 90 days trading horizon Dollar Tree is expected to under-perform the Erste Group. In addition to that, Dollar Tree is 1.64 times more volatile than Erste Group Bank. It trades about -0.05 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.1 per unit of volatility. If you would invest 2,572 in Erste Group Bank on August 27, 2024 and sell it today you would earn a total of 2,589 from holding Erste Group Bank or generate 100.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dollar Tree vs. Erste Group Bank
Performance |
| Timeline |
| Dollar Tree |
| Erste Group Bank |
Dollar Tree and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Erste Group
The main advantage of trading using opposite Dollar Tree and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group'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 |
| Erste Group vs. Gaming Realms plc | Erste Group vs. Global Net Lease | Erste Group vs. Broadcom | Erste Group vs. CAP LEASE AVIATION |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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