Correlation Between Livetech and Dollar General
Can any of the company-specific risk be diversified away by investing in both Livetech 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 Livetech and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livetech da Bahia and Dollar General, you can compare the effects of market volatilities on Livetech 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 Livetech with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livetech and Dollar General.
Diversification Opportunities for Livetech and Dollar General
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Livetech and Dollar is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Livetech da Bahia and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Livetech 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 Livetech da Bahia 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 Livetech i.e., Livetech and Dollar General go up and down completely randomly.
Pair Corralation between Livetech and Dollar General
Assuming the 90 days trading horizon Livetech da Bahia is expected to under-perform the Dollar General. But the stock apears to be less risky and, when comparing its historical volatility, Livetech da Bahia is 1.52 times less risky than Dollar General. The stock trades about -0.53 of its potential returns per unit of risk. The Dollar General is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,944 in Dollar General on September 1, 2024 and sell it today you would lose (6.00) from holding Dollar General or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Livetech da Bahia vs. Dollar General
Performance |
| Timeline |
| Livetech da Bahia |
| Dollar General |
Livetech and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livetech and Dollar General
The main advantage of trading using opposite Livetech and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livetech 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.| Livetech vs. Lupatech SA | Livetech vs. Rossi Residencial SA | Livetech vs. Usinas Siderrgicas de | Livetech vs. Refinaria de Petrleos |
| Dollar General vs. Brpr Corporate Offices | Dollar General vs. Spotify Technology SA | Dollar General vs. Technos SA | Dollar General vs. Uber Technologies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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