Correlation Between DOLLAR TREE and Cohen Dev
Can any of the company-specific risk be diversified away by investing in both DOLLAR TREE and Cohen Dev 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 Cohen Dev into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DOLLAR TREE and Cohen Dev, you can compare the effects of market volatilities on DOLLAR TREE and Cohen Dev 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 Cohen Dev. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOLLAR TREE and Cohen Dev.
Diversification Opportunities for DOLLAR TREE and Cohen Dev
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DOLLAR and Cohen is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding DOLLAR TREE and Cohen Dev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Dev 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 Cohen Dev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Dev has no effect on the direction of DOLLAR TREE i.e., DOLLAR TREE and Cohen Dev go up and down completely randomly.
Pair Corralation between DOLLAR TREE and Cohen Dev
Assuming the 90 days trading horizon DOLLAR TREE is expected to under-perform the Cohen Dev. But the stock apears to be less risky and, when comparing its historical volatility, DOLLAR TREE is 1.18 times less risky than Cohen Dev. The stock trades about -0.25 of its potential returns per unit of risk. The Cohen Dev is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,034,000 in Cohen Dev on February 7, 2024 and sell it today you would earn a total of 19,000 from holding Cohen Dev or generate 1.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 71.43% |
Values | Daily Returns |
DOLLAR TREE vs. Cohen Dev
Performance |
Timeline |
DOLLAR TREE |
Cohen Dev |
DOLLAR TREE and Cohen Dev Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DOLLAR TREE and Cohen Dev
The main advantage of trading using opposite DOLLAR TREE and Cohen Dev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOLLAR TREE position performs unexpectedly, Cohen Dev 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 Cohen Dev will offset losses from the drop in Cohen Dev's long position.DOLLAR TREE vs. Alibaba Health Information | DOLLAR TREE vs. National Storage Affiliates | DOLLAR TREE vs. Public Storage | DOLLAR TREE vs. Stewart Information Services |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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