Correlation Between Caseys General and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Caseys General and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on Caseys General and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Aristocrat Leisure.
Diversification Opportunities for Caseys General and Aristocrat Leisure
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caseys and Aristocrat is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Caseys General i.e., Caseys General and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Caseys General and Aristocrat Leisure
Assuming the 90 days trading horizon Caseys General is expected to generate 1.0 times less return on investment than Aristocrat Leisure. But when comparing it to its historical volatility, Caseys General Stores is 1.08 times less risky than Aristocrat Leisure. It trades about 0.09 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,148 in Aristocrat Leisure Limited on November 2, 2024 and sell it today you would earn a total of 2,092 from holding Aristocrat Leisure Limited or generate 97.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Caseys General Stores vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| Caseys General Stores |
| Aristocrat Leisure |
Caseys General and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Aristocrat Leisure
The main advantage of trading using opposite Caseys General and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Caseys General vs. Kingdee International Software | Caseys General vs. PT Steel Pipe | Caseys General vs. Cognizant Technology Solutions | Caseys General vs. DXC Technology Co |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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