Correlation Between Dollar General and SpartanNash

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

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

Diversification Opportunities for Dollar General and SpartanNash

0.81

Correlation Coefficient

Dollar General  SpartanNash

Very poor diversification

The 3 months correlation between Dollar and SpartanNash is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and SpartanNash Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpartanNash 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 SpartanNash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpartanNash has no effect on the direction of Dollar General i.e., Dollar General and SpartanNash go up and down completely randomly.

Pair Corralation between Dollar General and SpartanNash

Allowing for the 90-day total investment horizon Dollar General is expected to generate 0.79 times more return on investment than SpartanNash. However, Dollar General is 1.27 times less risky than SpartanNash. It trades about -0.02 of its potential returns per unit of risk. SpartanNash Co is currently generating about -0.1 per unit of risk. If you would invest  8,051  in Dollar General on September 4, 2024 and sell it today you would lose (272.00) from holding Dollar General or give up 3.38% of portfolio value over 90 days.

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

Dollar General  vs.  SpartanNash Co

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 nearly stable technical and fundamental indicators, Dollar General is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

SpartanNash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SpartanNash Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dollar General and SpartanNash

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

The idea behind Dollar General and SpartanNash Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.