Correlation Between Dollar General and Archer Daniels

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

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

Diversification Opportunities for Dollar General and Archer Daniels

-0.09

Correlation Coefficient

Dollar General  Archer Daniels

Good diversification

The 3 months correlation between Dollar and Archer is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland 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 Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Dollar General i.e., Dollar General and Archer Daniels go up and down completely randomly.

Pair Corralation between Dollar General and Archer Daniels

Allowing for the 90-day total investment horizon Dollar General is expected to generate 1.59 times more return on investment than Archer Daniels. However, Dollar General is 1.59 times more volatile than Archer Daniels Midland. It trades about 0.15 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.01 per unit of risk. If you would invest  10,377  in Dollar General on September 12, 2025 and sell it today you would earn a total of  2,891  from holding Dollar General or generate 27.86% 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.  Archer Daniels Midland

Dollar General

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Dollar General are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Dollar General reported solid returns over the last few months and may actually be approaching a breakup point.

Archer Daniels Midland

Risk-Adjusted Performance

Weakest

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Archer Daniels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dollar General and Archer Daniels

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

The idea behind Dollar General and Archer Daniels Midland 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.