Correlation Between Dollar General and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Dollar General and Coca Cola 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 Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and The Coca Cola, you can compare the effects of market volatilities on Dollar General and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Coca Cola.
Diversification Opportunities for Dollar General and Coca Cola
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dollar and Coca is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Dollar General i.e., Dollar General and Coca Cola go up and down completely randomly.
Pair Corralation between Dollar General and Coca Cola
Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the Coca Cola. In addition to that, Dollar General is 2.4 times more volatile than The Coca Cola. It trades about -0.07 of its total potential returns per unit of risk. The Coca Cola is currently generating about -0.12 per unit of volatility. If you would invest 6,592 in The Coca Cola on August 31, 2024 and sell it today you would lose (149.00) from holding The Coca Cola or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. The Coca Cola
Performance |
| Timeline |
| Dollar General |
| Coca Cola |
Dollar General and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and Coca Cola
The main advantage of trading using opposite Dollar General and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Dollar General vs. BJs Wholesale Club | Dollar General vs. Costco Wholesale Corp | Dollar General vs. Walmart | Dollar General vs. Dollar Tree |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |