Correlation Between Dollar Tree and Safety Shot
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Safety Shot 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 Safety Shot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Safety Shot, you can compare the effects of market volatilities on Dollar Tree and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Safety Shot.
Diversification Opportunities for Dollar Tree and Safety Shot
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dollar and Safety is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Dollar Tree i.e., Dollar Tree and Safety Shot go up and down completely randomly.
Pair Corralation between Dollar Tree and Safety Shot
Given the investment horizon of 90 days Dollar Tree is expected to under-perform the Safety Shot. But the stock apears to be less risky and, when comparing its historical volatility, Dollar Tree is 1.86 times less risky than Safety Shot. The stock trades about -0.05 of its potential returns per unit of risk. The Safety Shot is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Safety Shot on November 3, 2024 and sell it today you would lose (21.30) from holding Safety Shot or give up 31.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. Safety Shot
Performance |
| Timeline |
| Dollar Tree |
| Safety Shot |
Dollar Tree and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Safety Shot
The main advantage of trading using opposite Dollar Tree and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.| Dollar Tree vs. BJs Wholesale Club | Dollar Tree vs. Walmart | Dollar Tree vs. Target | Dollar Tree vs. Dollar General |
| Safety Shot vs. ArcelorMittal SA ADR | Safety Shot vs. Robix Environmental Technologies | Safety Shot vs. Modine Manufacturing | Safety Shot vs. Lucid Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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