Correlation Between Dollar General and Big Lots

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Can any of the company-specific risk be diversified away by investing in both Dollar General and Big Lots 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 Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General Corp and Big Lots, you can compare the effects of market volatilities on Dollar General and Big Lots 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 Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Big Lots.

Diversification Opportunities for Dollar General and Big Lots

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Dollar and Big Lots is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General Corp and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots 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 Corp are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Dollar General i.e., Dollar General and Big Lots go up and down completely randomly.

Pair Corralation between Dollar General and Big Lots

Allowing for the 90-day total investment horizon Dollar General Corp is expected to generate 0.28 times more return on investment than Big Lots. However, Dollar General Corp is 3.57 times less risky than Big Lots. It trades about 0.05 of its potential returns per unit of risk. Big Lots is currently generating about -0.13 per unit of risk. If you would invest  23,981  in Dollar General Corp on July 7, 2022 and sell it today you would earn a total of  289.00  from holding Dollar General Corp or generate 1.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dollar General Corp  vs.  Big Lots

 Performance (%) 
       Timeline  
Dollar General Corp 
Dollar Performance
0 of 100
Over the last 90 days Dollar General Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Dollar General is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dollar Price Channel

Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Big Lots Price Channel

Dollar General and Big Lots Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dollar General and Big Lots

The main advantage of trading using opposite Dollar General and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.
Dollar General vs. Amazon Inc
The idea behind Dollar General Corp and Big Lots 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.
Big Lots vs. Amazon Inc
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 CEO Directory module to screen CEOs from public companies around the world.

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