Correlation Between Albertsons Companies and Dollar General
Can any of the company-specific risk be diversified away by investing in both Albertsons Companies 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 Albertsons Companies and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albertsons Companies and Dollar General, you can compare the effects of market volatilities on Albertsons Companies 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 Albertsons Companies with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Dollar General.
Diversification Opportunities for Albertsons Companies and Dollar General
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Albertsons and Dollar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Albertsons Companies 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 Albertsons Companies 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 Albertsons Companies i.e., Albertsons Companies and Dollar General go up and down completely randomly.
Pair Corralation between Albertsons Companies and Dollar General
Considering the 90-day investment horizon Albertsons Companies is expected to generate 0.73 times more return on investment than Dollar General. However, Albertsons Companies is 1.37 times less risky than Dollar General. It trades about 0.1 of its potential returns per unit of risk. Dollar General is currently generating about -0.15 per unit of risk. If you would invest 1,838 in Albertsons Companies on August 27, 2024 and sell it today you would earn a total of 100.00 from holding Albertsons Companies or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albertsons Companies vs. Dollar General
Performance |
| Timeline |
| Albertsons Companies |
| Dollar General |
Albertsons Companies and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albertsons Companies and Dollar General
The main advantage of trading using opposite Albertsons Companies and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies 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.| Albertsons Companies vs. Innovative Food Hldg | Albertsons Companies vs. Calavo Growers | Albertsons Companies vs. The Chefs Warehouse | Albertsons Companies vs. AMCON Distributing |
| Dollar General vs. Innovative Food Hldg | Dollar General vs. Calavo Growers | Dollar General vs. The Chefs Warehouse | Dollar General vs. AMCON Distributing |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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