Correlation Between Blackrock World and Dollar Tree

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

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

Diversification Opportunities for Blackrock World and Dollar Tree

-0.5

Correlation Coefficient

Blackrock World  Dollar Tree

Very good diversification

The 3 months correlation between Blackrock and Dollar is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and Blackrock World 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 Blackrock World Mining 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 Blackrock World i.e., Blackrock World and Dollar Tree go up and down completely randomly.

Pair Corralation between Blackrock World and Dollar Tree

Assuming the 90 days trading horizon Blackrock World Mining is expected to under-perform the Dollar Tree. But the stock apears to be less risky and, when comparing its historical volatility, Blackrock World Mining is 1.87 times less risky than Dollar Tree. The stock trades about -0.09 of its potential returns per unit of risk. The Dollar Tree is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,946  in Dollar Tree on October 9, 2024 and sell it today you would earn a total of  750.00  from holding Dollar Tree or generate 10.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Blackrock World Mining  vs.  Dollar Tree

Blackrock World Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock World Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Dollar Tree

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Dollar Tree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Dollar Tree may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Blackrock World and Dollar Tree

The main advantage of trading using opposite Blackrock World and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World 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 Blackrock World Mining 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..