Correlation Between Corporate Travel and Dollar General

Can any of the company-specific risk be diversified away by investing in both Corporate Travel 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 Corporate Travel and Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corporate Travel Management and Dollar General, you can compare the effects of market volatilities on Corporate Travel 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 Corporate Travel with a short position of Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Dollar General.

Diversification Opportunities for Corporate Travel and Dollar General

-0.2

Correlation Coefficient

Corporate Travel  Dollar General

Good diversification

The 3 months correlation between Corporate and Dollar is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Corporate Travel 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 Corporate Travel Management 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 Corporate Travel i.e., Corporate Travel and Dollar General go up and down completely randomly.

Pair Corralation between Corporate Travel and Dollar General

Assuming the 90 days trading horizon Corporate Travel Management is expected to generate 1.2 times more return on investment than Dollar General. However, Corporate Travel is 1.2 times more volatile than Dollar General. It trades about 0.12 of its potential returns per unit of risk. Dollar General is currently generating about -0.06 per unit of risk. If you would invest  710.00  in Corporate Travel Management on October 21, 2024 and sell it today you would earn a total of  125.00  from holding Corporate Travel Management or generate 17.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Corporate Travel Management  vs.  Dollar General

Corporate Travel Man

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Corporate Travel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dollar General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dollar General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Corporate Travel and Dollar General

The main advantage of trading using opposite Corporate Travel and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel 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.

The idea behind Corporate Travel Management and Dollar General pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.