Correlation Between Leroy Seafood and Dollar Tree
Can any of the company-specific risk be diversified away by investing in both Leroy Seafood 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 Leroy Seafood and Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leroy Seafood Group and Dollar Tree, you can compare the effects of market volatilities on Leroy Seafood 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 Leroy Seafood with a short position of Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leroy Seafood and Dollar Tree.
Diversification Opportunities for Leroy Seafood and Dollar Tree
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leroy and Dollar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Leroy Seafood Group and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and Leroy Seafood 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 Leroy Seafood Group 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 Leroy Seafood i.e., Leroy Seafood and Dollar Tree go up and down completely randomly.
Pair Corralation between Leroy Seafood and Dollar Tree
Assuming the 90 days trading horizon Leroy Seafood Group is expected to generate 0.69 times more return on investment than Dollar Tree. However, Leroy Seafood Group is 1.45 times less risky than Dollar Tree. It trades about 0.37 of its potential returns per unit of risk. Dollar Tree is currently generating about -0.03 per unit of risk. If you would invest 4,293 in Leroy Seafood Group on May 3, 2024 and sell it today you would earn a total of 435.00 from holding Leroy Seafood Group or generate 10.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Leroy Seafood Group vs. Dollar Tree
Performance |
Timeline |
Leroy Seafood Group |
Dollar Tree |
Leroy Seafood and Dollar Tree Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leroy Seafood and Dollar Tree
The main advantage of trading using opposite Leroy Seafood and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leroy Seafood 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.Leroy Seafood vs. Rightmove PLC | Leroy Seafood vs. Bioventix | Leroy Seafood vs. 4Imprint Group Plc | Leroy Seafood vs. Auto Trader Group |
Dollar Tree vs. Rightmove PLC | Dollar Tree vs. Bioventix | Dollar Tree vs. 4Imprint Group Plc | Dollar Tree vs. Auto Trader Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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