Correlation Between Dollar Tree and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Vipshop Holdings 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 Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Vipshop Holdings Limited, you can compare the effects of market volatilities on Dollar Tree and Vipshop Holdings 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 Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Vipshop Holdings.
Diversification Opportunities for Dollar Tree and Vipshop Holdings
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dollar and Vipshop is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings 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 Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Dollar Tree i.e., Dollar Tree and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Dollar Tree and Vipshop Holdings
Given the investment horizon of 90 days Dollar Tree is expected to generate 0.7 times more return on investment than Vipshop Holdings. However, Dollar Tree is 1.42 times less risky than Vipshop Holdings. It trades about -0.12 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.29 per unit of risk. If you would invest 12,810 in Dollar Tree on January 20, 2024 and sell it today you would lose (607.00) from holding Dollar Tree or give up 4.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar Tree vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Dollar Tree |
| Vipshop Holdings |
Dollar Tree and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Vipshop Holdings
The main advantage of trading using opposite Dollar Tree and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Dollar Tree vs. Aquagold International | Dollar Tree vs. Morningstar Unconstrained Allocation | Dollar Tree vs. Thrivent High Yield | Dollar Tree vs. Via Renewables |
| Vipshop Holdings vs. Shoe Carnival | Vipshop Holdings vs. Hibbett Sports | Vipshop Holdings vs. Citi Trends | Vipshop Holdings vs. Zumiez 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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