Correlation Between Dollarama and Dollar General
Can any of the company-specific risk be diversified away by investing in both Dollarama and Dollar General 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 Dollarama and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollarama and Dollar General, you can compare the effects of market volatilities on Dollarama and Dollar General 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 Dollarama with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollarama and Dollar General.
Diversification Opportunities for Dollarama and Dollar General
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dollarama and Dollar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dollarama and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Dollarama 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 Dollarama are associated (or correlated) with Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Dollarama i.e., Dollarama and Dollar General go up and down completely randomly.
Pair Corralation between Dollarama and Dollar General
Assuming the 90 days horizon Dollarama is expected to generate 0.66 times more return on investment than Dollar General. However, Dollarama is 1.5 times less risky than Dollar General. It trades about -0.14 of its potential returns per unit of risk. Dollar General is currently generating about -0.1 per unit of risk. If you would invest 9,800 in Dollarama on November 4, 2024 and sell it today you would lose (347.00) from holding Dollarama or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollarama vs. Dollar General
Performance |
| Timeline |
| Dollarama |
| Dollar General |
Dollarama and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollarama and Dollar General
The main advantage of trading using opposite Dollarama and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollarama position performs unexpectedly, Dollar General 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 Dollar General will offset losses from the drop in Dollar General's long position.| Dollarama vs. Wal Mart de | Dollarama vs. Pan Pacific International | Dollarama vs. PriceSmart | Dollarama vs. Dollar General |
| Dollar General vs. BJs Wholesale Club | Dollar General vs. Costco Wholesale Corp | Dollar General vs. Walmart | Dollar General vs. Dollar Tree |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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