Correlation Between Natural Grocers and Dollar General

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

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

Diversification Opportunities for Natural Grocers and Dollar General

0.1

Correlation Coefficient

Natural Grocers  Dollar General

Average diversification

The 3 months correlation between Natural and Dollar is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Natural Grocers 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 Natural Grocers by are associated (or correlated) with Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Natural Grocers i.e., Natural Grocers and Dollar General go up and down completely randomly.

Pair Corralation between Natural Grocers and Dollar General

Given the investment horizon of 90 days Natural Grocers by is expected to under-perform the Dollar General. In addition to that, Natural Grocers is 1.64 times more volatile than Dollar General. It trades about -0.05 of its total potential returns per unit of risk. Dollar General is currently generating about 0.03 per unit of volatility. If you would invest  7,667  in Dollar General on November 28, 2024 and sell it today you would earn a total of  191.00  from holding Dollar General or generate 2.49% return on investment over 90 days.

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

Natural Grocers by  vs.  Dollar General

Natural Grocers by

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natural Grocers by has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Dollar General

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dollar General are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Dollar General is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Natural Grocers and Dollar General

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

The idea behind Natural Grocers by and Dollar General 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..