Correlation Between Dollar General and Sysco

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

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

Diversification Opportunities for Dollar General and Sysco

-0.15

Correlation Coefficient

Dollar General  Sysco

Good diversification

The 3 months correlation between Dollar and Sysco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco 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 Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of Dollar General i.e., Dollar General and Sysco go up and down completely randomly.

Pair Corralation between Dollar General and Sysco

Allowing for the 90-day total investment horizon Dollar General is expected to generate 1.23 times less return on investment than Sysco. In addition to that, Dollar General is 1.23 times more volatile than Sysco. It trades about 0.11 of its total potential returns per unit of risk. Sysco is currently generating about 0.17 per unit of volatility. If you would invest  7,363  in Sysco on September 21, 2024 and sell it today you would earn a total of  345.00  from holding Sysco or generate 4.69% 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.  Sysco

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.

Sysco

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dollar General and Sysco

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

The idea behind Dollar General and Sysco 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.