Correlation Between Dollar General and Target
Can any of the company-specific risk be diversified away by investing in both Dollar General and Target 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 Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and Target, you can compare the effects of market volatilities on Dollar General and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Target.
Diversification Opportunities for Dollar General and Target
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dollar and Target is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Dollar General i.e., Dollar General and Target go up and down completely randomly.
Pair Corralation between Dollar General and Target
Allowing for the 90-day total investment horizon Dollar General is expected to generate 0.95 times more return on investment than Target. However, Dollar General is 1.05 times less risky than Target. It trades about 0.19 of its potential returns per unit of risk. Target is currently generating about -0.1 per unit of risk. If you would invest 6,844 in Dollar General on November 18, 2024 and sell it today you would earn a total of 412.00 from holding Dollar General or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. Target
Performance |
| Timeline |
| Dollar General |
| Target |
Dollar General and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and Target
The main advantage of trading using opposite Dollar General and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Dollar General vs. BJs Wholesale Club | Dollar General vs. Costco Wholesale Corp | Dollar General vs. Walmart | Dollar General vs. Dollar Tree |
| Target vs. BJs Wholesale Club | Target vs. Dollar General | Target vs. Grocery Outlet Holding | Target vs. Kroger Company |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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