Correlation Between Dollar Tree and Dillards
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Dillards 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 Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Dillards, you can compare the effects of market volatilities on Dollar Tree and Dillards 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 Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Dillards.
Diversification Opportunities for Dollar Tree and Dillards
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollar and Dillards is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Dollar Tree i.e., Dollar Tree and Dillards go up and down completely randomly.
Pair Corralation between Dollar Tree and Dillards
Given the investment horizon of 90 days Dollar Tree is expected to under-perform the Dillards. But the stock apears to be less risky and, when comparing its historical volatility, Dollar Tree is 1.06 times less risky than Dillards. The stock trades about -0.06 of its potential returns per unit of risk. The Dillards is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 31,954 in Dillards on August 31, 2024 and sell it today you would earn a total of 12,358 from holding Dillards or generate 38.67% 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. Dillards
Performance |
| Timeline |
| Dollar Tree |
| Dillards |
Dollar Tree and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Dillards
The main advantage of trading using opposite Dollar Tree and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.| Dollar Tree vs. BJs Wholesale Club | Dollar Tree vs. Walmart | Dollar Tree vs. Target | Dollar Tree vs. Dollar General |
| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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