Correlation Between Dollar General and Dollar Tree
Can any of the company-specific risk be diversified away by investing in both Dollar General 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 Dollar General and Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and Dollar Tree, you can compare the effects of market volatilities on Dollar General 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 Dollar General with a short position of Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Dollar Tree.
Diversification Opportunities for Dollar General and Dollar Tree
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dollar and Dollar is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree and Dollar General 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 Dollar General 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 Dollar General i.e., Dollar General and Dollar Tree go up and down completely randomly.
Pair Corralation between Dollar General and Dollar Tree
Assuming the 90 days horizon Dollar General is expected to under-perform the Dollar Tree. But the stock apears to be less risky and, when comparing its historical volatility, Dollar General is 1.66 times less risky than Dollar Tree. The stock trades about -0.01 of its potential returns per unit of risk. The Dollar Tree is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,820 in Dollar Tree on September 1, 2024 and sell it today you would earn a total of 943.00 from holding Dollar Tree or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. Dollar Tree
Performance |
| Timeline |
| Dollar General |
| Dollar Tree |
Dollar General and Dollar Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and Dollar Tree
The main advantage of trading using opposite Dollar General and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General 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.| Dollar General vs. Grupo Carso SAB | Dollar General vs. Haverty Furniture Companies | Dollar General vs. Motorcar Parts of | Dollar General vs. CENTURIA OFFICE REIT |
| Dollar Tree vs. CARSALESCOM | Dollar Tree vs. National Retail Properties | Dollar Tree vs. Gruppo Mutuionline SpA | Dollar Tree vs. Pick n Pay |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |