Correlation Between Ollies Bargain and Dollar Tree
Can any of the company-specific risk be diversified away by investing in both Ollies Bargain 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 Ollies Bargain and Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ollies Bargain Outlet and Dollar Tree, you can compare the effects of market volatilities on Ollies Bargain 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 Ollies Bargain with a short position of Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ollies Bargain and Dollar Tree.
Diversification Opportunities for Ollies Bargain and Dollar Tree
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ollies and Dollar is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ollies Bargain Outlet and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and Ollies Bargain 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 Ollies Bargain Outlet 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 Ollies Bargain i.e., Ollies Bargain and Dollar Tree go up and down completely randomly.
Pair Corralation between Ollies Bargain and Dollar Tree
Given the investment horizon of 90 days Ollies Bargain Outlet is expected to under-perform the Dollar Tree. In addition to that, Ollies Bargain is 1.6 times more volatile than Dollar Tree. It trades about -0.08 of its total potential returns per unit of risk. Dollar Tree is currently generating about -0.07 per unit of volatility. If you would invest 12,615 in Dollar Tree on January 25, 2024 and sell it today you would lose (359.00) from holding Dollar Tree or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ollies Bargain Outlet vs. Dollar Tree
Performance |
| Timeline |
| Ollies Bargain Outlet |
| Dollar Tree |
Ollies Bargain and Dollar Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ollies Bargain and Dollar Tree
The main advantage of trading using opposite Ollies Bargain and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ollies Bargain 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.| Ollies Bargain vs. BJs Wholesale Club | Ollies Bargain vs. Dollar General | Ollies Bargain vs. Costco Wholesale Corp | Ollies Bargain vs. Walmart |
| Dollar Tree vs. Big Lots | Dollar Tree vs. Aquagold International | Dollar Tree vs. Thrivent High Yield | Dollar Tree vs. Morningstar Unconstrained Allocation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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