Correlation Between Caseys General and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both Caseys General and AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING, you can compare the effects of market volatilities on Caseys General and AOYAMA TRADING 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 AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and AOYAMA TRADING.
Diversification Opportunities for Caseys General and AOYAMA TRADING
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caseys and AOYAMA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of Caseys General i.e., Caseys General and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between Caseys General and AOYAMA TRADING
Assuming the 90 days trading horizon Caseys General is expected to generate 6.51 times less return on investment than AOYAMA TRADING. But when comparing it to its historical volatility, Caseys General Stores is 3.71 times less risky than AOYAMA TRADING. It trades about 0.22 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 780.00 in AOYAMA TRADING on August 28, 2024 and sell it today you would earn a total of 620.00 from holding AOYAMA TRADING or generate 79.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. AOYAMA TRADING
Performance |
| Timeline |
| Caseys General Stores |
| AOYAMA TRADING |
Caseys General and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and AOYAMA TRADING
The main advantage of trading using opposite Caseys General and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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