Correlation Between BlueScope Steel and Caseys General
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel 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 BlueScope Steel and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Limited and Caseys General Stores, you can compare the effects of market volatilities on BlueScope Steel 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 BlueScope Steel with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Caseys General.
Diversification Opportunities for BlueScope Steel and Caseys General
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BlueScope and Caseys is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited 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 BlueScope Steel 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 BlueScope Steel Limited 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 BlueScope Steel i.e., BlueScope Steel and Caseys General go up and down completely randomly.
Pair Corralation between BlueScope Steel and Caseys General
Assuming the 90 days horizon BlueScope Steel is expected to generate 3.17 times less return on investment than Caseys General. In addition to that, BlueScope Steel is 1.36 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 0.22 per unit of volatility. If you would invest 36,949 in Caseys General Stores on August 29, 2024 and sell it today you would earn a total of 3,651 from holding Caseys General Stores or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueScope Steel Limited vs. Caseys General Stores
Performance |
| Timeline |
| BlueScope Steel |
| Caseys General Stores |
BlueScope Steel and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Caseys General
The main advantage of trading using opposite BlueScope Steel and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel 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 BlueScope Steel Limited 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. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple 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 the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |