Correlation Between Dollar General and Sow Good

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

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

Diversification Opportunities for Dollar General and Sow Good

0.51

Correlation Coefficient

Dollar General  Sow Good

Very weak diversification

The 3 months correlation between Dollar and Sow is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Sow Good Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sow Good Common 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 Sow Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sow Good Common has no effect on the direction of Dollar General i.e., Dollar General and Sow Good go up and down completely randomly.

Pair Corralation between Dollar General and Sow Good

Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the Sow Good. But the stock apears to be less risky and, when comparing its historical volatility, Dollar General is 5.23 times less risky than Sow Good. The stock trades about -0.17 of its potential returns per unit of risk. The Sow Good Common is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  299.00  in Sow Good Common on October 6, 2024 and sell it today you would lose (21.00) from holding Sow Good Common or give up 7.02% 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.  Sow Good Common

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 inconsistent 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.

Sow Good Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sow Good Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dollar General and Sow Good

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

The idea behind Dollar General and Sow Good Common 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.