Correlation Between Caseys General and American Public
Can any of the company-specific risk be diversified away by investing in both Caseys General and American Public 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 American Public 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 American Public Education, you can compare the effects of market volatilities on Caseys General and American Public 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 American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and American Public.
Diversification Opportunities for Caseys General and American Public
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caseys and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education 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 American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Caseys General i.e., Caseys General and American Public go up and down completely randomly.
Pair Corralation between Caseys General and American Public
Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the American Public. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 1.98 times less risky than American Public. The stock trades about -0.23 of its potential returns per unit of risk. The American Public Education is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 2,060 in American Public Education on October 12, 2024 and sell it today you would lose (90.00) from holding American Public Education or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. American Public Education
Performance |
| Timeline |
| Caseys General Stores |
| American Public Education |
Caseys General and American Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and American Public
The main advantage of trading using opposite Caseys General and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, American Public 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 American Public will offset losses from the drop in American Public's long position.| Caseys General vs. Xiwang Special Steel | Caseys General vs. ANTA SPORTS PRODUCT | Caseys General vs. Transport International Holdings | Caseys General vs. SIERRA METALS |
| American Public vs. Marie Brizard Wine | American Public vs. BURLINGTON STORES | American Public vs. Global Ship Lease | American Public vs. Caseys General Stores |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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