Correlation Between Dollar Tree and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Burlington Stores 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 Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Burlington Stores, you can compare the effects of market volatilities on Dollar Tree and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Burlington Stores.
Diversification Opportunities for Dollar Tree and Burlington Stores
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dollar and Burlington is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Dollar Tree i.e., Dollar Tree and Burlington Stores go up and down completely randomly.
Pair Corralation between Dollar Tree and Burlington Stores
Assuming the 90 days horizon Dollar Tree is expected to generate 2.27 times less return on investment than Burlington Stores. In addition to that, Dollar Tree is 1.44 times more volatile than Burlington Stores. It trades about 0.11 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.36 per unit of volatility. If you would invest 23,200 in Burlington Stores on August 29, 2024 and sell it today you would earn a total of 5,000 from holding Burlington Stores or generate 21.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. Burlington Stores
Performance |
| Timeline |
| Dollar Tree |
| Burlington Stores |
Dollar Tree and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Burlington Stores
The main advantage of trading using opposite Dollar Tree and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| Dollar Tree vs. Walmart | Dollar Tree vs. Walmart | Dollar Tree vs. Costco Wholesale | Dollar Tree vs. Target |
| Burlington Stores vs. Walmart | Burlington Stores vs. Walmart | Burlington Stores vs. Costco Wholesale | Burlington Stores vs. Target |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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