Correlation Between Rite Aid and Target
Can any of the company-specific risk be diversified away by investing in both Rite Aid and Target 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 Rite Aid and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rite Aid and Target, you can compare the effects of market volatilities on Rite Aid and Target 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 Rite Aid with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and Target.
Diversification Opportunities for Rite Aid and Target
Pay attention - limited upside
The 3 months correlation between Rite and Target is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Rite Aid 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 Rite Aid are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Rite Aid i.e., Rite Aid and Target go up and down completely randomly.
Pair Corralation between Rite Aid and Target
Considering the 90-day investment horizon Rite Aid is expected to under-perform the Target. In addition to that, Rite Aid is 5.67 times more volatile than Target. It trades about -0.06 of its total potential returns per unit of risk. Target is currently generating about 0.03 per unit of volatility. If you would invest 15,202 in Target on January 26, 2024 and sell it today you would earn a total of 1,332 from holding Target or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 64.92% |
| Values | Daily Returns |
Rite Aid vs. Target
Performance |
| Timeline |
| Rite Aid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Target |
Rite Aid and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rite Aid and Target
The main advantage of trading using opposite Rite Aid and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rite Aid position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Rite Aid vs. PetMed Express | Rite Aid vs. High Tide | Rite Aid vs. China Jo Jo Drugstores | Rite Aid vs. Bimi International Medical |
| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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