Correlation Between Dollar General and Caseys General

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

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

Diversification Opportunities for Dollar General and Caseys General

-0.04

Correlation Coefficient

Dollar General  Caseys General

Good diversification

The 3 months correlation between Dollar and Caseys is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Dollar General i.e., Dollar General and Caseys General go up and down completely randomly.

Pair Corralation between Dollar General and Caseys General

Allowing for the 90-day total investment horizon Dollar General is expected to generate 1.23 times more return on investment than Caseys General. However, Dollar General is 1.23 times more volatile than Caseys General Stores. It trades about 0.12 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.08 per unit of risk. If you would invest  7,510  in Dollar General on December 28, 2024 and sell it today you would earn a total of  1,244  from holding Dollar General or generate 16.56% return on investment over 90 days.

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

Dollar General  vs.  Caseys General Stores

Dollar General

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dollar General are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish technical and fundamental indicators, Dollar General reported solid returns over the last few months and may actually be approaching a breakup point.

Caseys General Stores

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dollar General and Caseys General

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

The idea behind Dollar General and Caseys General Stores 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.