Correlation Between Dollar General and Walmart
Can any of the company-specific risk be diversified away by investing in both Dollar General and Walmart 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 Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and Walmart, you can compare the effects of market volatilities on Dollar General and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Walmart.
Diversification Opportunities for Dollar General and Walmart
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dollar and Walmart is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Dollar General i.e., Dollar General and Walmart go up and down completely randomly.
Pair Corralation between Dollar General and Walmart
Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the Walmart. In addition to that, Dollar General is 2.4 times more volatile than Walmart. It trades about -0.08 of its total potential returns per unit of risk. Walmart is currently generating about 0.12 per unit of volatility. If you would invest 4,856 in Walmart on August 27, 2024 and sell it today you would earn a total of 4,188 from holding Walmart or generate 86.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. Walmart
Performance |
| Timeline |
| Dollar General |
| Walmart |
Dollar General and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and Walmart
The main advantage of trading using opposite Dollar General and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart'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 |
| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart 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 CEOs Directory module to screen CEOs from public companies around the world.
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