Correlation Between Dollar Tree and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Dollar Tree and Costco Wholesale 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 Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Costco Wholesale Corp, you can compare the effects of market volatilities on Dollar Tree and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Costco Wholesale.
Diversification Opportunities for Dollar Tree and Costco Wholesale
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dollar and Costco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of Dollar Tree i.e., Dollar Tree and Costco Wholesale go up and down completely randomly.
Pair Corralation between Dollar Tree and Costco Wholesale
Given the investment horizon of 90 days Dollar Tree is expected to generate 21.28 times less return on investment than Costco Wholesale. In addition to that, Dollar Tree is 1.58 times more volatile than Costco Wholesale Corp. It trades about 0.0 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.17 per unit of volatility. If you would invest 52,254 in Costco Wholesale Corp on January 24, 2024 and sell it today you would earn a total of 20,014 from holding Costco Wholesale Corp or generate 38.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dollar Tree vs. Costco Wholesale Corp
Performance |
Timeline |
Dollar Tree |
Costco Wholesale Corp |
Dollar Tree and Costco Wholesale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dollar Tree and Costco Wholesale
The main advantage of trading using opposite Dollar Tree and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.Dollar Tree vs. Big Lots | Dollar Tree vs. Aquagold International | Dollar Tree vs. Thrivent High Yield | Dollar Tree vs. Morningstar Unconstrained Allocation |
Costco Wholesale vs. Big Lots | Costco Wholesale vs. Aquagold International | Costco Wholesale vs. Thrivent High Yield | Costco Wholesale 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
CEOs Directory Screen CEOs from public companies around the world | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |