Correlation Between Dollar Tree and Hoteles City
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Hoteles City 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 Hoteles City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Hoteles City Express, you can compare the effects of market volatilities on Dollar Tree and Hoteles City 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 Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Hoteles City.
Diversification Opportunities for Dollar Tree and Hoteles City
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollar and Hoteles is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express 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 Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Dollar Tree i.e., Dollar Tree and Hoteles City go up and down completely randomly.
Pair Corralation between Dollar Tree and Hoteles City
Assuming the 90 days trading horizon Dollar Tree is expected to under-perform the Hoteles City. But the stock apears to be less risky and, when comparing its historical volatility, Dollar Tree is 1.98 times less risky than Hoteles City. The stock trades about -0.2 of its potential returns per unit of risk. The Hoteles City Express is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 446.00 in Hoteles City Express on November 30, 2024 and sell it today you would earn a total of 9.00 from holding Hoteles City Express or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Dollar Tree vs. Hoteles City Express
Performance |
| Timeline |
| Dollar Tree |
| Hoteles City Express |
Dollar Tree and Hoteles City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Hoteles City
The main advantage of trading using opposite Dollar Tree and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Hoteles City 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 Hoteles City will offset losses from the drop in Hoteles City's long position.| Dollar Tree vs. Cognizant Technology Solutions | Dollar Tree vs. Burlington Stores | Dollar Tree vs. Micron Technology | Dollar Tree vs. Desarrolladora Homex SAB |
| Hoteles City vs. Controladora Vuela Compaa | Hoteles City vs. Alsea SAB de | Hoteles City vs. Nemak S A | Hoteles City vs. Grupo Comercial Chedraui |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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