Correlation Between Consumer Products and Dollar General
Can any of the company-specific risk be diversified away by investing in both Consumer Products 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 Consumer Products and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Products Fund and Dollar General, you can compare the effects of market volatilities on Consumer Products 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 Consumer Products with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Products and Dollar General.
Diversification Opportunities for Consumer Products and Dollar General
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Consumer and Dollar is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Products Fund and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Consumer Products 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 Consumer Products Fund 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 Consumer Products i.e., Consumer Products and Dollar General go up and down completely randomly.
Pair Corralation between Consumer Products and Dollar General
Assuming the 90 days horizon Consumer Products Fund is expected to generate 0.4 times more return on investment than Dollar General. However, Consumer Products Fund is 2.52 times less risky than Dollar General. It trades about 0.05 of its potential returns per unit of risk. Dollar General is currently generating about -0.06 per unit of risk. If you would invest 4,886 in Consumer Products Fund on August 29, 2024 and sell it today you would earn a total of 605.00 from holding Consumer Products Fund or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Products Fund vs. Dollar General
Performance |
| Timeline |
| Consumer Products |
| Dollar General |
Consumer Products and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Products and Dollar General
The main advantage of trading using opposite Consumer Products and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Products 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.| Consumer Products vs. Kellanova | Consumer Products vs. Bunge Limited | Consumer Products vs. BJs Wholesale Club | Consumer Products vs. Colgate Palmolive |
| Dollar General vs. Innovative Food Hldg | Dollar General vs. Calavo Growers | Dollar General vs. The Chefs Warehouse | Dollar General 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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