Correlation Between Dollar Tree and Whitbread PLC
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Whitbread PLC 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 Whitbread PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Whitbread PLC, you can compare the effects of market volatilities on Dollar Tree and Whitbread PLC 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 Whitbread PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Whitbread PLC.
Diversification Opportunities for Dollar Tree and Whitbread PLC
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dollar and Whitbread is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Whitbread PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread PLC 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 Whitbread PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread PLC has no effect on the direction of Dollar Tree i.e., Dollar Tree and Whitbread PLC go up and down completely randomly.
Pair Corralation between Dollar Tree and Whitbread PLC
Assuming the 90 days trading horizon Dollar Tree is expected to generate 4.49 times more return on investment than Whitbread PLC. However, Dollar Tree is 4.49 times more volatile than Whitbread PLC. It trades about 0.11 of its potential returns per unit of risk. Whitbread PLC is currently generating about -0.48 per unit of risk. If you would invest 6,736 in Dollar Tree on September 3, 2024 and sell it today you would earn a total of 453.00 from holding Dollar Tree or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. Whitbread PLC
Performance |
| Timeline |
| Dollar Tree |
| Whitbread PLC |
Dollar Tree and Whitbread PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Whitbread PLC
The main advantage of trading using opposite Dollar Tree and Whitbread PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Whitbread PLC 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 Whitbread PLC will offset losses from the drop in Whitbread PLC's long position.| Dollar Tree vs. Blackrock World Mining | Dollar Tree vs. Ecclesiastical Insurance Office | Dollar Tree vs. CVS Health Corp | Dollar Tree vs. UNIQA Insurance Group |
| Whitbread PLC vs. Albion Technology General | Whitbread PLC vs. K3 Business Technology | Whitbread PLC vs. Ashtead Technology Holdings | Whitbread PLC vs. International Consolidated Airlines |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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