Correlation Between Dollar Tree and African Agriculture
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and African Agriculture 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 African Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and African Agriculture Holdings, you can compare the effects of market volatilities on Dollar Tree and African Agriculture 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 African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and African Agriculture.
Diversification Opportunities for Dollar Tree and African Agriculture
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dollar and African is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture 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 African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of Dollar Tree i.e., Dollar Tree and African Agriculture go up and down completely randomly.
Pair Corralation between Dollar Tree and African Agriculture
If you would invest 6,626 in Dollar Tree on August 27, 2024 and sell it today you would earn a total of 14.00 from holding Dollar Tree or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Dollar Tree vs. African Agriculture Holdings
Performance |
| Timeline |
| Dollar Tree |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dollar Tree and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and African Agriculture
The main advantage of trading using opposite Dollar Tree and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, African Agriculture 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 African Agriculture will offset losses from the drop in African Agriculture's long position.| Dollar Tree vs. Innovative Food Hldg | Dollar Tree vs. Calavo Growers | Dollar Tree vs. The Chefs Warehouse | Dollar Tree vs. AMCON Distributing |
| African Agriculture vs. Juniata Valley Financial | African Agriculture vs. Olympic Steel | African Agriculture vs. IPG Photonics | African Agriculture vs. Pintec Technology Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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