Correlation Between Build A and Caseys General
Can any of the company-specific risk be diversified away by investing in both Build A 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 Build A and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Build A Bear Workshop and Caseys General Stores, you can compare the effects of market volatilities on Build A 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 Build A with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build A and Caseys General.
Diversification Opportunities for Build A and Caseys General
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Build and Caseys is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Build A Bear Workshop 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 Build A 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 Build A Bear Workshop 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 Build A i.e., Build A and Caseys General go up and down completely randomly.
Pair Corralation between Build A and Caseys General
Considering the 90-day investment horizon Build A Bear Workshop is expected to under-perform the Caseys General. In addition to that, Build A is 2.5 times more volatile than Caseys General Stores. It trades about -0.05 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.31 per unit of volatility. If you would invest 39,623 in Caseys General Stores on November 1, 2024 and sell it today you would earn a total of 3,033 from holding Caseys General Stores or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Build A Bear Workshop vs. Caseys General Stores
Performance |
| Timeline |
| Build A Bear |
| Caseys General Stores |
Build A and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Build A and Caseys General
The main advantage of trading using opposite Build A and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Build A 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.The idea behind Build A Bear Workshop and Caseys General Stores 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.| Caseys General vs. Leslies | Caseys General vs. Sally Beauty Holdings | Caseys General vs. ODP Corp | Caseys General vs. 1 800 FLOWERSCOM |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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