Correlation Between Caseys General and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Caseys General and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on Caseys General and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Restaurant Brands.
Diversification Opportunities for Caseys General and Restaurant Brands
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Caseys and Restaurant is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Caseys General i.e., Caseys General and Restaurant Brands go up and down completely randomly.
Pair Corralation between Caseys General and Restaurant Brands
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 1.2 times more return on investment than Restaurant Brands. However, Caseys General is 1.2 times more volatile than Restaurant Brands International. It trades about 0.08 of its potential returns per unit of risk. Restaurant Brands International is currently generating about -0.02 per unit of risk. If you would invest 26,256 in Caseys General Stores on December 11, 2024 and sell it today you would earn a total of 9,944 from holding Caseys General Stores or generate 37.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Restaurant Brands Internationa
Performance |
| Timeline |
| Caseys General Stores |
| Restaurant Brands |
Caseys General and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Restaurant Brands
The main advantage of trading using opposite Caseys General and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Caseys General vs. AGRICULTBK HADR25 YC | ||
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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