Correlation Between Dollar General and Dollarama
Can any of the company-specific risk be diversified away by investing in both Dollar General and Dollarama 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 Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and Dollarama, you can compare the effects of market volatilities on Dollar General and Dollarama 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 Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Dollarama.
Diversification Opportunities for Dollar General and Dollarama
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollar and Dollarama is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama 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 Dollarama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollarama has no effect on the direction of Dollar General i.e., Dollar General and Dollarama go up and down completely randomly.
Pair Corralation between Dollar General and Dollarama
Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the Dollarama. In addition to that, Dollar General is 1.91 times more volatile than Dollarama. It trades about -0.08 of its total potential returns per unit of risk. Dollarama is currently generating about 0.1 per unit of volatility. If you would invest 5,946 in Dollarama on August 28, 2024 and sell it today you would earn a total of 4,333 from holding Dollarama or generate 72.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.17% |
| Values | Daily Returns |
Dollar General vs. Dollarama
Performance |
| Timeline |
| Dollar General |
| Dollarama |
Dollar General and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and Dollarama
The main advantage of trading using opposite Dollar General and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Dollarama 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 Dollarama will offset losses from the drop in Dollarama's long position.| Dollar General vs. Innovative Food Hldg | Dollar General vs. Calavo Growers | Dollar General vs. The Chefs Warehouse | Dollar General vs. AMCON Distributing |
| Dollarama vs. Wal Mart de | Dollarama vs. Pan Pacific International | Dollarama vs. PriceSmart | Dollarama vs. Dollar General |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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