Correlation Between Dollar Tree and HEALTHCARE REAL
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and HEALTHCARE REAL 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 HEALTHCARE REAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and HEALTHCARE REAL A, you can compare the effects of market volatilities on Dollar Tree and HEALTHCARE REAL 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 HEALTHCARE REAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and HEALTHCARE REAL.
Diversification Opportunities for Dollar Tree and HEALTHCARE REAL
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dollar and HEALTHCARE is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and HEALTHCARE REAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHCARE REAL A 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 HEALTHCARE REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHCARE REAL A has no effect on the direction of Dollar Tree i.e., Dollar Tree and HEALTHCARE REAL go up and down completely randomly.
Pair Corralation between Dollar Tree and HEALTHCARE REAL
Assuming the 90 days horizon Dollar Tree is expected to generate 1.47 times more return on investment than HEALTHCARE REAL. However, Dollar Tree is 1.47 times more volatile than HEALTHCARE REAL A. It trades about 0.26 of its potential returns per unit of risk. HEALTHCARE REAL A is currently generating about 0.02 per unit of risk. If you would invest 5,823 in Dollar Tree on September 13, 2024 and sell it today you would earn a total of 942.00 from holding Dollar Tree or generate 16.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. HEALTHCARE REAL A
Performance |
| Timeline |
| Dollar Tree |
| HEALTHCARE REAL A |
Dollar Tree and HEALTHCARE REAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and HEALTHCARE REAL
The main advantage of trading using opposite Dollar Tree and HEALTHCARE REAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, HEALTHCARE REAL 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 HEALTHCARE REAL will offset losses from the drop in HEALTHCARE REAL's long position.| Dollar Tree vs. Walmart | Dollar Tree vs. Costco Wholesale | Dollar Tree vs. Dollarama | Dollar Tree vs. Superior Plus Corp |
| HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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