Correlation Between UTStarcom Holdings and Dollar Tree

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

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

Diversification Opportunities for UTStarcom Holdings and Dollar Tree

-0.32

Correlation Coefficient

UTStarcom Holdings  Dollar Tree

Very good diversification

The 3 months correlation between UTStarcom and Dollar is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding UTStarcom Holdings Corp and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and UTStarcom Holdings 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 UTStarcom Holdings Corp 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 UTStarcom Holdings i.e., UTStarcom Holdings and Dollar Tree go up and down completely randomly.

Pair Corralation between UTStarcom Holdings and Dollar Tree

Assuming the 90 days trading horizon UTStarcom Holdings Corp is expected to generate 0.7 times more return on investment than Dollar Tree. However, UTStarcom Holdings Corp is 1.42 times less risky than Dollar Tree. It trades about 0.09 of its potential returns per unit of risk. Dollar Tree is currently generating about 0.02 per unit of risk. If you would invest  5,274  in UTStarcom Holdings Corp on September 26, 2024 and sell it today you would earn a total of  426.00  from holding UTStarcom Holdings Corp or generate 8.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UTStarcom Holdings Corp  vs.  Dollar Tree

UTStarcom Holdings Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UTStarcom Holdings Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, UTStarcom Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dollar Tree

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dollar Tree are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Dollar Tree is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UTStarcom Holdings and Dollar Tree

The main advantage of trading using opposite UTStarcom Holdings and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UTStarcom Holdings 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 UTStarcom Holdings Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..