Correlation Between International Business and Dollar General
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Dollar General, you can compare the effects of market volatilities on International Business 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 International Business with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Dollar General.
Diversification Opportunities for International Business and Dollar General
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Dollar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and International Business 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 International Business Machines 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 International Business i.e., International Business and Dollar General go up and down completely randomly.
Pair Corralation between International Business and Dollar General
Considering the 90-day investment horizon International Business Machines is expected to under-perform the Dollar General. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 1.16 times less risky than Dollar General. The stock trades about -0.08 of its potential returns per unit of risk. The Dollar General is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,128 in Dollar General on February 13, 2024 and sell it today you would earn a total of 665.00 from holding Dollar General or generate 5.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
International Business Machine vs. Dollar General
Performance |
Timeline |
International Business |
Dollar General |
International Business and Dollar General Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Business and Dollar General
The main advantage of trading using opposite International Business and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.International Business vs. EPAM Systems | International Business vs. Infosys Ltd ADR | International Business vs. Cognizant Technology Solutions | International Business vs. FiscalNote Holdings |
Dollar General vs. BJs Wholesale Club | Dollar General vs. Big Lots | Dollar General vs. Costco Wholesale Corp | Dollar General vs. Walmart |
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.
Other Complementary Tools
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |