Correlation Between Dollar General and Apple

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

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

Diversification Opportunities for Dollar General and Apple

0.36

Correlation Coefficient

Dollar General  Apple

Weak diversification

The 3 months correlation between Dollar and Apple is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Dollar General i.e., Dollar General and Apple go up and down completely randomly.

Pair Corralation between Dollar General and Apple

Assuming the 90 days trading horizon Dollar General is expected to under-perform the Apple. In addition to that, Dollar General is 2.48 times more volatile than Apple Inc. It trades about -0.07 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.17 per unit of volatility. If you would invest  5,703  in Apple Inc on September 23, 2024 and sell it today you would earn a total of  2,034  from holding Apple Inc or generate 35.67% return on investment over 90 days.

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

Dollar General  vs.  Apple Inc

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.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dollar General and Apple

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

The idea behind Dollar General and Apple Inc 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.