Correlation Between Dollar Tree and Dingdong ADR
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Dingdong ADR 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 Dingdong ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Dingdong ADR, you can compare the effects of market volatilities on Dollar Tree and Dingdong ADR 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 Dingdong ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Dingdong ADR.
Diversification Opportunities for Dollar Tree and Dingdong ADR
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dollar and Dingdong is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Dingdong ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dingdong ADR 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 Dingdong ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dingdong ADR has no effect on the direction of Dollar Tree i.e., Dollar Tree and Dingdong ADR go up and down completely randomly.
Pair Corralation between Dollar Tree and Dingdong ADR
Given the investment horizon of 90 days Dollar Tree is expected to generate 0.61 times more return on investment than Dingdong ADR. However, Dollar Tree is 1.65 times less risky than Dingdong ADR. It trades about 0.1 of its potential returns per unit of risk. Dingdong ADR is currently generating about -0.02 per unit of risk. If you would invest 6,626 in Dollar Tree on August 28, 2024 and sell it today you would earn a total of 352.00 from holding Dollar Tree or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. Dingdong ADR
Performance |
| Timeline |
| Dollar Tree |
| Dingdong ADR |
Dollar Tree and Dingdong ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Dingdong ADR
The main advantage of trading using opposite Dollar Tree and Dingdong ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Dingdong ADR 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 Dingdong ADR will offset losses from the drop in Dingdong ADR'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 |
| Dingdong ADR vs. Village Super Market | Dingdong ADR vs. Weis Markets | Dingdong ADR vs. Sendas Distribuidora SA | Dingdong ADR vs. Ingles Markets Incorporated |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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