Correlation Between National Retail and Dollar Tree
Can any of the company-specific risk be diversified away by investing in both National Retail and Dollar Tree 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 National Retail and Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Dollar Tree, you can compare the effects of market volatilities on National Retail and Dollar Tree 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 National Retail with a short position of Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Dollar Tree.
Diversification Opportunities for National Retail and Dollar Tree
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Dollar is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and National Retail 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 National Retail Properties are associated (or correlated) with Dollar Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar Tree has no effect on the direction of National Retail i.e., National Retail and Dollar Tree go up and down completely randomly.
Pair Corralation between National Retail and Dollar Tree
Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.54 times more return on investment than Dollar Tree. However, National Retail Properties is 1.86 times less risky than Dollar Tree. It trades about 0.02 of its potential returns per unit of risk. Dollar Tree is currently generating about -0.04 per unit of risk. If you would invest 3,597 in National Retail Properties on December 1, 2024 and sell it today you would earn a total of 448.00 from holding National Retail Properties or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
National Retail Properties vs. Dollar Tree
Performance |
| Timeline |
| National Retail Prop |
| Dollar Tree |
National Retail and Dollar Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Dollar Tree
The main advantage of trading using opposite National Retail and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Dollar Tree 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 Dollar Tree will offset losses from the drop in Dollar Tree's long position.| National Retail vs. Stewart Information Services | National Retail vs. EEDUCATION ALBERT AB | National Retail vs. INFORMATION SVC GRP | National Retail vs. Zoom Video Communications |
| Dollar Tree vs. UNIQA INSURANCE GR | Dollar Tree vs. Ping An Insurance | Dollar Tree vs. Sixt Leasing SE | Dollar Tree vs. GRENKELEASING Dusseldorf |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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