Correlation Between Big 5 and Caseys General
Can any of the company-specific risk be diversified away by investing in both Big 5 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 Big 5 and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and Caseys General Stores, you can compare the effects of market volatilities on Big 5 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 Big 5 with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and Caseys General.
Diversification Opportunities for Big 5 and Caseys General
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Caseys is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting 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 Big 5 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 Big 5 Sporting 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 Big 5 i.e., Big 5 and Caseys General go up and down completely randomly.
Pair Corralation between Big 5 and Caseys General
Given the investment horizon of 90 days Big 5 Sporting is expected to under-perform the Caseys General. In addition to that, Big 5 is 2.19 times more volatile than Caseys General Stores. It trades about -0.09 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.09 per unit of volatility. If you would invest 33,646 in Caseys General Stores on August 24, 2024 and sell it today you would earn a total of 7,970 from holding Caseys General Stores or generate 23.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. Caseys General Stores
Performance |
| Timeline |
| Big 5 Sporting |
| Caseys General Stores |
Big 5 and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and Caseys General
The main advantage of trading using opposite Big 5 and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 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 Big 5 Sporting 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |