Correlation Between Dollar General and British Amer
Can any of the company-specific risk be diversified away by investing in both Dollar General and British Amer 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 British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and British American Tobacco, you can compare the effects of market volatilities on Dollar General and British Amer 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 British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and British Amer.
Diversification Opportunities for Dollar General and British Amer
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dollar and British is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Dollar General i.e., Dollar General and British Amer go up and down completely randomly.
Pair Corralation between Dollar General and British Amer
Allowing for the 90-day total investment horizon Dollar General is expected to generate 1.31 times more return on investment than British Amer. However, Dollar General is 1.31 times more volatile than British American Tobacco. It trades about 0.21 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.09 per unit of risk. If you would invest 13,222 in Dollar General on December 20, 2023 and sell it today you would earn a total of 2,353 from holding Dollar General or generate 17.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dollar General vs. British American Tobacco
Performance |
Timeline |
Dollar General |
British American Tobacco |
Dollar General and British Amer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dollar General and British Amer
The main advantage of trading using opposite Dollar General and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.Dollar General vs. SNDL Inc | Dollar General vs. NH Foods | Dollar General vs. Doubledown InteractiveCo | Dollar General vs. Bridgford Foods |
British Amer vs. Kellanova | British Amer vs. Bunge Limited | British Amer vs. Lamb Weston Holdings | British Amer vs. Tootsie Roll Industries |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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