Correlation Between Ocado Group and Dollar General

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

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

Diversification Opportunities for Ocado Group and Dollar General

0.81

Correlation Coefficient

Ocado Group  Dollar General

Very poor diversification

The 3 months correlation between Ocado and Dollar is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ocado Group plc and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General and Ocado Group 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 Ocado Group plc 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 Ocado Group i.e., Ocado Group and Dollar General go up and down completely randomly.

Pair Corralation between Ocado Group and Dollar General

Assuming the 90 days horizon Ocado Group plc is expected to under-perform the Dollar General. In addition to that, Ocado Group is 1.22 times more volatile than Dollar General. It trades about -0.11 of its total potential returns per unit of risk. Dollar General is currently generating about -0.04 per unit of volatility. If you would invest  7,727  in Dollar General on September 30, 2024 and sell it today you would lose (138.00) from holding Dollar General or give up 1.79% of portfolio value over 90 days.

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

Ocado Group plc  vs.  Dollar General

Ocado Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocado Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 latest sluggish performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ocado Group and Dollar General

The main advantage of trading using opposite Ocado Group and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocado Group 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 Ocado Group plc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.