Correlation Between Kodiak Sciences and DOLLAR

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Can any of the company-specific risk be diversified away by investing in both Kodiak Sciences and DOLLAR 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 Kodiak Sciences and DOLLAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kodiak Sciences and DOLLAR TREE INC, you can compare the effects of market volatilities on Kodiak Sciences and DOLLAR 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 Kodiak Sciences with a short position of DOLLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Sciences and DOLLAR.

Diversification Opportunities for Kodiak Sciences and DOLLAR

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Kodiak and DOLLAR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and DOLLAR TREE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLLAR TREE INC and Kodiak Sciences 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 Kodiak Sciences are associated (or correlated) with DOLLAR. 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 INC has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and DOLLAR go up and down completely randomly.

Pair Corralation between Kodiak Sciences and DOLLAR

Considering the 90-day investment horizon Kodiak Sciences is expected to under-perform the DOLLAR. In addition to that, Kodiak Sciences is 8.97 times more volatile than DOLLAR TREE INC. It trades about -0.08 of its total potential returns per unit of risk. DOLLAR TREE INC is currently generating about -0.19 per unit of volatility. If you would invest  9,688  in DOLLAR TREE INC on October 20, 2024 and sell it today you would lose (358.00) from holding DOLLAR TREE INC or give up 3.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Kodiak Sciences  vs.  DOLLAR TREE INC

 Performance 
       Timeline  
Kodiak Sciences 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.
DOLLAR TREE INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DOLLAR TREE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DOLLAR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kodiak Sciences and DOLLAR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kodiak Sciences and DOLLAR

The main advantage of trading using opposite Kodiak Sciences and DOLLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Sciences position performs unexpectedly, DOLLAR 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 will offset losses from the drop in DOLLAR's long position.
The idea behind Kodiak Sciences and DOLLAR TREE INC 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 Stocks Directory module to find actively traded stocks across global markets.

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