Correlation Between Dollar General and Farmmi
Can any of the company-specific risk be diversified away by investing in both Dollar General and Farmmi 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 Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and Farmmi Inc, you can compare the effects of market volatilities on Dollar General and Farmmi 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 Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Farmmi.
Diversification Opportunities for Dollar General and Farmmi
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dollar and Farmmi is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc 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 Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Dollar General i.e., Dollar General and Farmmi go up and down completely randomly.
Pair Corralation between Dollar General and Farmmi
Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the Farmmi. But the stock apears to be less risky and, when comparing its historical volatility, Dollar General is 1.51 times less risky than Farmmi. The stock trades about -0.37 of its potential returns per unit of risk. The Farmmi Inc is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Farmmi Inc on February 2, 2024 and sell it today you would lose (3.00) from holding Farmmi Inc or give up 3.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dollar General vs. Farmmi Inc
Performance |
Timeline |
Dollar General |
Farmmi Inc |
Dollar General and Farmmi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dollar General and Farmmi
The main advantage of trading using opposite Dollar General and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi's long position.Dollar General vs. BJs Wholesale Club | Dollar General vs. Big Lots | Dollar General vs. Costco Wholesale Corp | Dollar General vs. Walmart |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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