Correlation Between Caseys General and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Caseys General and Sally Beauty 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 Caseys General and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and Sally Beauty Holdings, you can compare the effects of market volatilities on Caseys General and Sally Beauty 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 Caseys General with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Sally Beauty.
Diversification Opportunities for Caseys General and Sally Beauty
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caseys and Sally is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings and Caseys 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 Caseys General Stores are associated (or correlated) with Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of Caseys General i.e., Caseys General and Sally Beauty go up and down completely randomly.
Pair Corralation between Caseys General and Sally Beauty
Given the investment horizon of 90 days Caseys General Stores is expected to generate 0.65 times more return on investment than Sally Beauty. However, Caseys General Stores is 1.55 times less risky than Sally Beauty. It trades about 0.1 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about 0.02 per unit of risk. If you would invest 30,331 in Caseys General Stores on August 27, 2024 and sell it today you would earn a total of 12,457 from holding Caseys General Stores or generate 41.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Sally Beauty Holdings
Performance |
| Timeline |
| Caseys General Stores |
| Sally Beauty Holdings |
Caseys General and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Sally Beauty
The main advantage of trading using opposite Caseys General and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Sally Beauty 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.| Caseys General vs. MOGU Inc | Caseys General vs. iPower Inc | Caseys General vs. Jeffs Brands | Caseys General vs. Kidpik Corp |
| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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