Correlation Between Postal Savings and Caseys General
Can any of the company-specific risk be diversified away by investing in both Postal Savings and Caseys 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 Postal Savings and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and Caseys General Stores, you can compare the effects of market volatilities on Postal Savings and Caseys 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 Postal Savings with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Caseys General.
Diversification Opportunities for Postal Savings and Caseys General
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Postal and Caseys is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Postal Savings i.e., Postal Savings and Caseys General go up and down completely randomly.
Pair Corralation between Postal Savings and Caseys General
Assuming the 90 days horizon Postal Savings is expected to generate 21.96 times less return on investment than Caseys General. But when comparing it to its historical volatility, Postal Savings Bank is 1.11 times less risky than Caseys General. It trades about 0.01 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 36,350 in Caseys General Stores on August 30, 2024 and sell it today you would earn a total of 3,050 from holding Caseys General Stores or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Postal Savings Bank vs. Caseys General Stores
Performance |
| Timeline |
| Postal Savings Bank |
| Caseys General Stores |
Postal Savings and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and Caseys General
The main advantage of trading using opposite Postal Savings and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, Caseys 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 Caseys General will offset losses from the drop in Caseys General's long position.| Postal Savings vs. Perdoceo Education | Postal Savings vs. STRAYER EDUCATION | Postal Savings vs. Costco Wholesale Corp | Postal Savings vs. Tsingtao Brewery |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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