Correlation Between Dollar General and Plano Plano

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

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

Diversification Opportunities for Dollar General and Plano Plano

-0.32

Correlation Coefficient

Dollar General  Plano Plano

Very good diversification

The 3 months correlation between Dollar and Plano is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Plano Plano Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plano Plano Desenvol 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 Plano Plano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plano Plano Desenvol has no effect on the direction of Dollar General i.e., Dollar General and Plano Plano go up and down completely randomly.

Pair Corralation between Dollar General and Plano Plano

Assuming the 90 days trading horizon Dollar General is expected to under-perform the Plano Plano. But the stock apears to be less risky and, when comparing its historical volatility, Dollar General is 1.14 times less risky than Plano Plano. The stock trades about -0.05 of its potential returns per unit of risk. The Plano Plano Desenvolvimento is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  437.00  in Plano Plano Desenvolvimento on October 5, 2024 and sell it today you would earn a total of  474.00  from holding Plano Plano Desenvolvimento or generate 108.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Dollar General  vs.  Plano Plano Desenvolvimento

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 somewhat strong fundamental indicators, Dollar General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Plano Plano Desenvol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plano Plano Desenvolvimento has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dollar General and Plano Plano

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

The idea behind Dollar General and Plano Plano Desenvolvimento 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.