Correlation Between Dollar Tree and CHS
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and CHS 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 CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and CHS Inc CM, you can compare the effects of market volatilities on Dollar Tree and CHS 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 CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and CHS.
Diversification Opportunities for Dollar Tree and CHS
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dollar and CHS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and CHS Inc CM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CM 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 CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CM has no effect on the direction of Dollar Tree i.e., Dollar Tree and CHS go up and down completely randomly.
Pair Corralation between Dollar Tree and CHS
Given the investment horizon of 90 days Dollar Tree is expected to generate 5.77 times more return on investment than CHS. However, Dollar Tree is 5.77 times more volatile than CHS Inc CM. It trades about 0.21 of its potential returns per unit of risk. CHS Inc CM is currently generating about -0.08 per unit of risk. If you would invest 6,331 in Dollar Tree on August 31, 2024 and sell it today you would earn a total of 819.00 from holding Dollar Tree or generate 12.94% 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. CHS Inc CM
Performance |
| Timeline |
| Dollar Tree |
| CHS Inc CM |
Dollar Tree and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and CHS
The main advantage of trading using opposite Dollar Tree and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| Dollar Tree vs. BJs Wholesale Club | Dollar Tree vs. Walmart | Dollar Tree vs. Target | Dollar Tree vs. Dollar General |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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