Correlation Between Dollar Tree and Hf Foods

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

By analyzing existing cross correlation between Dollar Tree and Hf Foods Group, you can compare the effects of market volatilities on Dollar Tree and Hf Foods 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 Hf Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Hf Foods.

Diversification Opportunities for Dollar Tree and Hf Foods

0.21

Correlation Coefficient

Dollar Tree  Hf Foods

Modest diversification

The 3 months correlation between Dollar and HFFG is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group 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 Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of Dollar Tree i.e., Dollar Tree and Hf Foods go up and down completely randomly.

Pair Corralation between Dollar Tree and Hf Foods

Given the investment horizon of 90 days Dollar Tree is expected to generate 1.28 times more return on investment than Hf Foods. However, Dollar Tree is 1.28 times more volatile than Hf Foods Group. It trades about 0.29 of its potential returns per unit of risk. Hf Foods Group is currently generating about 0.26 per unit of risk. If you would invest  6,227  in Dollar Tree on September 13, 2024 and sell it today you would earn a total of  936.00  from holding Dollar Tree or generate 15.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dollar Tree  vs.  Hf Foods Group

Dollar Tree

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dollar Tree are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Dollar Tree is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Hf Foods Group

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hf Foods Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Hf Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dollar Tree and Hf Foods

The main advantage of trading using opposite Dollar Tree and Hf Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree position performs unexpectedly, Hf Foods 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 Hf Foods will offset losses from the drop in Hf Foods' long position.

The idea behind Dollar Tree and Hf Foods Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.