Correlation Between Dollar Tree and Sparebank
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Sparebank 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 Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Sparebank 1 SR, you can compare the effects of market volatilities on Dollar Tree and Sparebank 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Sparebank.
Diversification Opportunities for Dollar Tree and Sparebank
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dollar and Sparebank is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Dollar Tree i.e., Dollar Tree and Sparebank go up and down completely randomly.
Pair Corralation between Dollar Tree and Sparebank
Assuming the 90 days trading horizon Dollar Tree is expected to generate 1.3 times less return on investment than Sparebank. In addition to that, Dollar Tree is 2.23 times more volatile than Sparebank 1 SR. It trades about 0.12 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.34 per unit of volatility. If you would invest 14,910 in Sparebank 1 SR on November 10, 2024 and sell it today you would earn a total of 1,060 from holding Sparebank 1 SR or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. Sparebank 1 SR
Performance |
| Timeline |
| Dollar Tree |
| Sparebank 1 SR |
Dollar Tree and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Sparebank
The main advantage of trading using opposite Dollar Tree and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Dollar Tree vs. FC Investment Trust | Dollar Tree vs. Diversified Energy | Dollar Tree vs. Mineral Financial Investments | Dollar Tree vs. Chrysalis Investments |
| Sparebank vs. Foresight Environmental Infrastructure | Sparebank vs. Europa Metals | Sparebank vs. Symphony Environmental Technologies | Sparebank vs. AMG Advanced Metallurgical |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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