Correlation Between Dollar Tree and Mannatech Incorporated
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Mannatech Incorporated 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 Mannatech Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Mannatech Incorporated, you can compare the effects of market volatilities on Dollar Tree and Mannatech Incorporated 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 Mannatech Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Mannatech Incorporated.
Diversification Opportunities for Dollar Tree and Mannatech Incorporated
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dollar and Mannatech is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Mannatech Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mannatech Incorporated 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 Mannatech Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mannatech Incorporated has no effect on the direction of Dollar Tree i.e., Dollar Tree and Mannatech Incorporated go up and down completely randomly.
Pair Corralation between Dollar Tree and Mannatech Incorporated
Given the investment horizon of 90 days Dollar Tree is expected to under-perform the Mannatech Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Dollar Tree is 20.59 times less risky than Mannatech Incorporated. The stock trades about -0.05 of its potential returns per unit of risk. The Mannatech Incorporated is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,083 in Mannatech Incorporated on August 28, 2024 and sell it today you would lose (1,295) from holding Mannatech Incorporated or give up 62.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.34% |
| Values | Daily Returns |
Dollar Tree vs. Mannatech Incorporated
Performance |
| Timeline |
| Dollar Tree |
| Mannatech Incorporated |
Dollar Tree and Mannatech Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Mannatech Incorporated
The main advantage of trading using opposite Dollar Tree and Mannatech Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Mannatech Incorporated 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 Mannatech Incorporated will offset losses from the drop in Mannatech Incorporated'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 |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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