Correlation Between Bloomsbury Publishing and Dollar Tree

Can any of the company-specific risk be diversified away by investing in both Bloomsbury Publishing 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 Bloomsbury Publishing and Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bloomsbury Publishing Plc and Dollar Tree, you can compare the effects of market volatilities on Bloomsbury Publishing 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 Bloomsbury Publishing with a short position of Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Dollar Tree.

Diversification Opportunities for Bloomsbury Publishing and Dollar Tree

-0.33

Correlation Coefficient

Bloomsbury Publishing  Dollar Tree

Very good diversification

The 3 months correlation between Bloomsbury and Dollar is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and Bloomsbury Publishing 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 Bloomsbury Publishing Plc 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 Bloomsbury Publishing i.e., Bloomsbury Publishing and Dollar Tree go up and down completely randomly.

Pair Corralation between Bloomsbury Publishing and Dollar Tree

Assuming the 90 days trading horizon Bloomsbury Publishing is expected to generate 1.73 times less return on investment than Dollar Tree. But when comparing it to its historical volatility, Bloomsbury Publishing Plc is 1.17 times less risky than Dollar Tree. It trades about 0.06 of its potential returns per unit of risk. Dollar Tree is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,234  in Dollar Tree on October 8, 2024 and sell it today you would earn a total of  205.00  from holding Dollar Tree or generate 2.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Bloomsbury Publishing Plc  vs.  Dollar Tree

Bloomsbury Publishing Plc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bloomsbury Publishing is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dollar Tree

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dollar Tree are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dollar Tree may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bloomsbury Publishing and Dollar Tree

The main advantage of trading using opposite Bloomsbury Publishing and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing 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.

The idea behind Bloomsbury Publishing Plc and Dollar Tree pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.