Correlation Between Dollar General and Aquagold International

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

By analyzing existing cross correlation between Dollar General and Aquagold International, you can compare the effects of market volatilities on Dollar General and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Aquagold International.

Diversification Opportunities for Dollar General and Aquagold International

0.42

Correlation Coefficient

Dollar General  Aquagold International

Very weak diversification

The 3 months correlation between Dollar and Aquagold is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Dollar General i.e., Dollar General and Aquagold International go up and down completely randomly.

Pair Corralation between Dollar General and Aquagold International

Allowing for the 90-day total investment horizon Dollar General is expected to generate 0.08 times more return on investment than Aquagold International. However, Dollar General is 12.75 times less risky than Aquagold International. It trades about -0.24 of its potential returns per unit of risk. Aquagold International is currently generating about -0.23 per unit of risk. If you would invest  8,080  in Dollar General on October 8, 2024 and sell it today you would lose (613.00) from holding Dollar General or give up 7.59% of portfolio value over 90 days.

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

Dollar General  vs.  Aquagold International

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 sluggish performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Dollar General and Aquagold International

The main advantage of trading using opposite Dollar General and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position.

The idea behind Dollar General and Aquagold International 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .