Correlation Between INDOFOOD AGRI and DOLLAR TREE
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI 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 INDOFOOD AGRI and DOLLAR TREE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDOFOOD AGRI RES and DOLLAR TREE, you can compare the effects of market volatilities on INDOFOOD AGRI 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 INDOFOOD AGRI with a short position of DOLLAR TREE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and DOLLAR TREE.
Diversification Opportunities for INDOFOOD AGRI and DOLLAR TREE
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and DOLLAR is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and DOLLAR TREE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLLAR TREE and INDOFOOD AGRI 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 INDOFOOD AGRI RES 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 INDOFOOD AGRI i.e., INDOFOOD AGRI and DOLLAR TREE go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and DOLLAR TREE
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the DOLLAR TREE. In addition to that, INDOFOOD AGRI is 1.69 times more volatile than DOLLAR TREE. It trades about -0.14 of its total potential returns per unit of risk. DOLLAR TREE is currently generating about 0.12 per unit of volatility. If you would invest 6,838 in DOLLAR TREE on November 27, 2024 and sell it today you would earn a total of 289.00 from holding DOLLAR TREE or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. DOLLAR TREE
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| DOLLAR TREE |
INDOFOOD AGRI and DOLLAR TREE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and DOLLAR TREE
The main advantage of trading using opposite INDOFOOD AGRI and DOLLAR TREE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI 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.| INDOFOOD AGRI vs. THAI BEVERAGE | INDOFOOD AGRI vs. BIOPHARMA CREDIT DL | INDOFOOD AGRI vs. Carnegie Clean Energy | INDOFOOD AGRI vs. Discover Financial Services |
| DOLLAR TREE vs. Coor Service Management | DOLLAR TREE vs. AGF Management Limited | DOLLAR TREE vs. Take Two Interactive Software | DOLLAR TREE vs. Check Point Software |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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