Correlation Between Primary Health and Dollar Tree
Can any of the company-specific risk be diversified away by investing in both Primary Health and Dollar Tree 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 Primary Health and Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primary Health Properties and Dollar Tree, you can compare the effects of market volatilities on Primary Health and Dollar Tree 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 Primary Health with a short position of Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primary Health and Dollar Tree.
Diversification Opportunities for Primary Health and Dollar Tree
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Primary and Dollar is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and Primary Health 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 Primary Health Properties are associated (or correlated) with Dollar Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar Tree has no effect on the direction of Primary Health i.e., Primary Health and Dollar Tree go up and down completely randomly.
Pair Corralation between Primary Health and Dollar Tree
Assuming the 90 days trading horizon Primary Health Properties is expected to under-perform the Dollar Tree. But the stock apears to be less risky and, when comparing its historical volatility, Primary Health Properties is 3.32 times less risky than Dollar Tree. The stock trades about -0.03 of its potential returns per unit of risk. The Dollar Tree is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,643 in Dollar Tree on September 2, 2024 and sell it today you would earn a total of 546.00 from holding Dollar Tree or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primary Health Properties vs. Dollar Tree
Performance |
| Timeline |
| Primary Health Properties |
| Dollar Tree |
Primary Health and Dollar Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primary Health and Dollar Tree
The main advantage of trading using opposite Primary Health and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health position performs unexpectedly, Dollar Tree 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 Dollar Tree will offset losses from the drop in Dollar Tree's long position.| Primary Health vs. Hammerson PLC | Primary Health vs. Workspace Group PLC | Primary Health vs. Supermarket Income REIT | Primary Health vs. Diversified Energy |
| Dollar Tree vs. Smithson Investment Trust | Dollar Tree vs. Primary Health Properties | Dollar Tree vs. Taylor Maritime Investments | Dollar Tree vs. Schroders Investment Trusts |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |