Correlation Between Trade Desk and DOLLAR TREE
Can any of the company-specific risk be diversified away by investing in both Trade Desk 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 Trade Desk and DOLLAR TREE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Trade Desk and DOLLAR TREE, you can compare the effects of market volatilities on Trade Desk 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 Trade Desk with a short position of DOLLAR TREE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Desk and DOLLAR TREE.
Diversification Opportunities for Trade Desk and DOLLAR TREE
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Trade and DOLLAR is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and DOLLAR TREE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLLAR TREE and Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and DOLLAR TREE go up and down completely randomly.
Pair Corralation between Trade Desk and DOLLAR TREE
Assuming the 90 days trading horizon The Trade Desk is expected to generate 1.37 times more return on investment than DOLLAR TREE. However, Trade Desk is 1.37 times more volatile than DOLLAR TREE. It trades about 0.13 of its potential returns per unit of risk. DOLLAR TREE is currently generating about 0.11 per unit of risk. If you would invest 10,988 in The Trade Desk on August 29, 2024 and sell it today you would earn a total of 1,308 from holding The Trade Desk or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Trade Desk vs. DOLLAR TREE
Performance |
| Timeline |
| Trade Desk |
| DOLLAR TREE |
Trade Desk and DOLLAR TREE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Desk and DOLLAR TREE
The main advantage of trading using opposite Trade Desk and DOLLAR TREE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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.The idea behind The Trade Desk and DOLLAR TREE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| DOLLAR TREE vs. MARKET VECTR RETAIL | DOLLAR TREE vs. The Trade Desk | DOLLAR TREE vs. United Airlines Holdings | DOLLAR TREE vs. SIDETRADE EO 1 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |