Correlation Between Caseys General and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Caseys General and Nomad Foods 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 Nomad Foods 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 Nomad Foods, you can compare the effects of market volatilities on Caseys General and Nomad Foods 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 Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Nomad Foods.
Diversification Opportunities for Caseys General and Nomad Foods
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caseys and Nomad is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods 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 Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Caseys General i.e., Caseys General and Nomad Foods go up and down completely randomly.
Pair Corralation between Caseys General and Nomad Foods
Assuming the 90 days trading horizon Caseys General is expected to generate 1.33 times less return on investment than Nomad Foods. But when comparing it to its historical volatility, Caseys General Stores is 1.64 times less risky than Nomad Foods. It trades about 0.07 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,600 in Nomad Foods on September 12, 2024 and sell it today you would earn a total of 40.00 from holding Nomad Foods or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Nomad Foods
Performance |
| Timeline |
| Caseys General Stores |
| Nomad Foods |
Caseys General and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Nomad Foods
The main advantage of trading using opposite Caseys General and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
| Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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