Correlation Between Big Lots and Dollar General
Can any of the company-specific risk be diversified away by investing in both Big Lots 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 Big Lots and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Lots and Dollar General, you can compare the effects of market volatilities on Big Lots 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 Big Lots with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Lots and Dollar General.
Diversification Opportunities for Big Lots and Dollar General
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Big and Dollar is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Big Lots and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Big Lots 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 Big Lots 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 Big Lots i.e., Big Lots and Dollar General go up and down completely randomly.
Pair Corralation between Big Lots and Dollar General
Considering the 90-day investment horizon Big Lots is expected to under-perform the Dollar General. In addition to that, Big Lots is 2.75 times more volatile than Dollar General. It trades about -0.02 of its total potential returns per unit of risk. Dollar General is currently generating about -0.05 per unit of volatility. If you would invest 21,572 in Dollar General on January 20, 2024 and sell it today you would lose (7,004) from holding Dollar General or give up 32.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Big Lots vs. Dollar General
Performance |
| Timeline |
| Big Lots |
| Dollar General |
Big Lots and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Lots and Dollar General
The main advantage of trading using opposite Big Lots and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Lots 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.| Big Lots vs. BJs Wholesale Club | Big Lots vs. Dollar General | Big Lots vs. Costco Wholesale Corp | Big Lots vs. Walmart |
| Dollar General vs. Aquagold International | Dollar General vs. Morningstar Unconstrained Allocation | Dollar General vs. Thrivent High Yield | Dollar General vs. Via Renewables |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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