Correlation Between Lapidoth and DOLLAR TREE

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

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

Diversification Opportunities for Lapidoth and DOLLAR TREE

-0.51

Correlation Coefficient

Lapidoth  DOLLAR TREE

Excellent diversification

The 3 months correlation between Lapidoth and DOLLAR is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lapidoth and DOLLAR TREE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLLAR TREE and Lapidoth 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 Lapidoth 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 Lapidoth i.e., Lapidoth and DOLLAR TREE go up and down completely randomly.

Pair Corralation between Lapidoth and DOLLAR TREE

Assuming the 90 days trading horizon Lapidoth is expected to generate 1.04 times more return on investment than DOLLAR TREE. However, Lapidoth is 1.04 times more volatile than DOLLAR TREE. It trades about 0.02 of its potential returns per unit of risk. DOLLAR TREE is currently generating about -0.02 per unit of risk. If you would invest  534,007  in Lapidoth on February 4, 2024 and sell it today you would earn a total of  41,093  from holding Lapidoth or generate 7.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.43%
Values	Daily Returns

Lapidoth  vs.  DOLLAR TREE

Lapidoth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lapidoth are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lapidoth may actually be approaching a critical reversion point that can send shares even higher in June 2024.

DOLLAR TREE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOLLAR TREE 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lapidoth and DOLLAR TREE

The main advantage of trading using opposite Lapidoth and DOLLAR TREE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lapidoth 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 Lapidoth 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.