Correlation Between DOLLAR TREE and Lapidoth
Can any of the company-specific risk be diversified away by investing in both DOLLAR TREE and Lapidoth 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 Lapidoth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DOLLAR TREE and Lapidoth, you can compare the effects of market volatilities on DOLLAR TREE and Lapidoth 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 Lapidoth. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOLLAR TREE and Lapidoth.
Diversification Opportunities for DOLLAR TREE and Lapidoth
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DOLLAR and Lapidoth is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding DOLLAR TREE and Lapidoth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lapidoth 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 Lapidoth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lapidoth has no effect on the direction of DOLLAR TREE i.e., DOLLAR TREE and Lapidoth go up and down completely randomly.
Pair Corralation between DOLLAR TREE and Lapidoth
Assuming the 90 days trading horizon DOLLAR TREE is expected to generate 1.91 times more return on investment than Lapidoth. However, DOLLAR TREE is 1.91 times more volatile than Lapidoth. It trades about 0.05 of its potential returns per unit of risk. Lapidoth is currently generating about -0.04 per unit of risk. If you would invest 6,106 in DOLLAR TREE on August 25, 2024 and sell it today you would earn a total of 164.00 from holding DOLLAR TREE or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.27% |
| Values | Daily Returns |
DOLLAR TREE vs. Lapidoth
Performance |
| Timeline |
| DOLLAR TREE |
| Lapidoth |
DOLLAR TREE and Lapidoth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DOLLAR TREE and Lapidoth
The main advantage of trading using opposite DOLLAR TREE and Lapidoth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOLLAR TREE position performs unexpectedly, Lapidoth 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 Lapidoth will offset losses from the drop in Lapidoth's long position.| DOLLAR TREE vs. Goodyear Tire Rubber | DOLLAR TREE vs. APPLIED MATERIALS | DOLLAR TREE vs. National Health Investors | DOLLAR TREE vs. Bumrungrad Hospital Public |
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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