Correlation Between Dollar General and Albertsons Companies
Can any of the company-specific risk be diversified away by investing in both Dollar General and Albertsons Companies 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 Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and Albertsons Companies, you can compare the effects of market volatilities on Dollar General and Albertsons Companies 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 Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Albertsons Companies.
Diversification Opportunities for Dollar General and Albertsons Companies
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dollar and Albertsons is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies 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 Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Dollar General i.e., Dollar General and Albertsons Companies go up and down completely randomly.
Pair Corralation between Dollar General and Albertsons Companies
Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the Albertsons Companies. In addition to that, Dollar General is 1.38 times more volatile than Albertsons Companies. It trades about -0.19 of its total potential returns per unit of risk. Albertsons Companies is currently generating about 0.2 per unit of volatility. If you would invest 1,834 in Albertsons Companies on August 27, 2024 and sell it today you would earn a total of 103.00 from holding Albertsons Companies or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. Albertsons Companies
Performance |
| Timeline |
| Dollar General |
| Albertsons Companies |
Dollar General and Albertsons Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and Albertsons Companies
The main advantage of trading using opposite Dollar General and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.| Dollar General vs. Hf Foods Group | Dollar General vs. Innovative Food Hldg | Dollar General vs. Calavo Growers | Dollar General vs. The Chefs Warehouse |
| Albertsons Companies vs. Hf Foods Group | Albertsons Companies vs. Innovative Food Hldg | Albertsons Companies vs. Calavo Growers | Albertsons Companies vs. The Chefs Warehouse |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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