Correlation Between Dollar Tree and Sendas Distribuidora
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Sendas Distribuidora 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 Sendas Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Sendas Distribuidora SA, you can compare the effects of market volatilities on Dollar Tree and Sendas Distribuidora 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 Sendas Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Sendas Distribuidora.
Diversification Opportunities for Dollar Tree and Sendas Distribuidora
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dollar and Sendas is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Sendas Distribuidora SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sendas Distribuidora 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 Sendas Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sendas Distribuidora has no effect on the direction of Dollar Tree i.e., Dollar Tree and Sendas Distribuidora go up and down completely randomly.
Pair Corralation between Dollar Tree and Sendas Distribuidora
Given the investment horizon of 90 days Dollar Tree is expected to generate 0.74 times more return on investment than Sendas Distribuidora. However, Dollar Tree is 1.36 times less risky than Sendas Distribuidora. It trades about -0.05 of its potential returns per unit of risk. Sendas Distribuidora SA is currently generating about -0.08 per unit of risk. If you would invest 14,642 in Dollar Tree on November 9, 2024 and sell it today you would lose (7,190) from holding Dollar Tree or give up 49.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.55% |
| Values | Daily Returns |
Dollar Tree vs. Sendas Distribuidora SA
Performance |
| Timeline |
| Dollar Tree |
| Sendas Distribuidora |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Dollar Tree and Sendas Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Sendas Distribuidora
The main advantage of trading using opposite Dollar Tree and Sendas Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Sendas Distribuidora 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 Sendas Distribuidora will offset losses from the drop in Sendas Distribuidora's long position.| Dollar Tree vs. BJs Wholesale Club | Dollar Tree vs. Walmart | Dollar Tree vs. Target | Dollar Tree vs. Dollar General |
| Sendas Distribuidora vs. Village Super Market | Sendas Distribuidora vs. Weis Markets | Sendas Distribuidora vs. Ingles Markets Incorporated | Sendas Distribuidora vs. Grocery Outlet Holding |
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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