Correlation Between Dollar General and G Willi

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

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

Diversification Opportunities for Dollar General and G Willi

0.14

Correlation Coefficient

Dollar General  G Willi

Average diversification

The 3 months correlation between Dollar and WILC is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and G Willi Food International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Willi Food 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 G Willi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Willi Food has no effect on the direction of Dollar General i.e., Dollar General and G Willi go up and down completely randomly.

Pair Corralation between Dollar General and G Willi

Allowing for the 90-day total investment horizon Dollar General is expected to generate 1.36 times more return on investment than G Willi. However, Dollar General is 1.36 times more volatile than G Willi Food International. It trades about 0.12 of its potential returns per unit of risk. G Willi Food International is currently generating about -0.04 per unit of risk. If you would invest  7,530  in Dollar General on December 27, 2024 and sell it today you would earn a total of  1,224  from holding Dollar General or generate 16.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Dollar General  vs.  G Willi Food International

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.

G Willi Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days G Willi Food International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, G Willi is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dollar General and G Willi

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

The idea behind Dollar General and G Willi Food 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.