Correlation Between Wal-Mart and Dollar General
Can any of the company-specific risk be diversified away by investing in both Wal-Mart and Dollar General 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 Wal-Mart and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wal Mart de Mxico and Dollar General, you can compare the effects of market volatilities on Wal-Mart and Dollar General 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 Wal-Mart with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal-Mart and Dollar General.
Diversification Opportunities for Wal-Mart and Dollar General
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wal-Mart and Dollar is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de Mxico and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Wal-Mart 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 Wal Mart de Mxico are associated (or correlated) with Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Wal-Mart i.e., Wal-Mart and Dollar General go up and down completely randomly.
Pair Corralation between Wal-Mart and Dollar General
Assuming the 90 days trading horizon Wal Mart de Mxico is expected to generate 10.22 times more return on investment than Dollar General. However, Wal-Mart is 10.22 times more volatile than Dollar General. It trades about 0.3 of its potential returns per unit of risk. Dollar General is currently generating about -0.01 per unit of risk. If you would invest 83.00 in Wal Mart de Mxico on September 1, 2024 and sell it today you would earn a total of 163.00 from holding Wal Mart de Mxico or generate 196.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wal Mart de Mxico vs. Dollar General
Performance |
| Timeline |
| Wal Mart de |
| Dollar General |
Wal-Mart and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wal-Mart and Dollar General
The main advantage of trading using opposite Wal-Mart and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wal-Mart position performs unexpectedly, Dollar General 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 General will offset losses from the drop in Dollar General's long position.| Wal-Mart vs. Renesas Electronics | Wal-Mart vs. Meiko Electronics Co | Wal-Mart vs. UET United Electronic | Wal-Mart vs. Eastman Chemical |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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