Correlation Between Dollar General and China Jo
Can any of the company-specific risk be diversified away by investing in both Dollar General and China Jo 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 China Jo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and China Jo Jo Drugstores, you can compare the effects of market volatilities on Dollar General and China Jo 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 China Jo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and China Jo.
Diversification Opportunities for Dollar General and China Jo
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dollar and China is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and China Jo Jo Drugstores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Jo Jo 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 China Jo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Jo Jo has no effect on the direction of Dollar General i.e., Dollar General and China Jo go up and down completely randomly.
Pair Corralation between Dollar General and China Jo
Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the China Jo. But the stock apears to be less risky and, when comparing its historical volatility, Dollar General is 2.45 times less risky than China Jo. The stock trades about -0.18 of its potential returns per unit of risk. The China Jo Jo Drugstores is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 305.00 in China Jo Jo Drugstores on January 20, 2024 and sell it today you would lose (9.00) from holding China Jo Jo Drugstores or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. China Jo Jo Drugstores
Performance |
| Timeline |
| Dollar General |
| China Jo Jo |
Dollar General and China Jo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and China Jo
The main advantage of trading using opposite Dollar General and China Jo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, China Jo 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 China Jo will offset losses from the drop in China Jo's long position.| Dollar General vs. Aquagold International | Dollar General vs. Morningstar Unconstrained Allocation | Dollar General vs. Thrivent High Yield | Dollar General vs. Via Renewables |
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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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