Correlation Between Caseys General and BLUESCOPE STEEL
Can any of the company-specific risk be diversified away by investing in both Caseys General and BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL, you can compare the effects of market volatilities on Caseys General and BLUESCOPE STEEL 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 BLUESCOPE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and BLUESCOPE STEEL.
Diversification Opportunities for Caseys General and BLUESCOPE STEEL
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caseys and BLUESCOPE is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL 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 BLUESCOPE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLUESCOPE STEEL has no effect on the direction of Caseys General i.e., Caseys General and BLUESCOPE STEEL go up and down completely randomly.
Pair Corralation between Caseys General and BLUESCOPE STEEL
Assuming the 90 days trading horizon Caseys General is expected to generate 5.72 times less return on investment than BLUESCOPE STEEL. But when comparing it to its historical volatility, Caseys General Stores is 1.82 times less risky than BLUESCOPE STEEL. It trades about 0.1 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,165 in BLUESCOPE STEEL on November 28, 2024 and sell it today you would earn a total of 285.00 from holding BLUESCOPE STEEL or generate 24.46% 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. BLUESCOPE STEEL
Performance |
| Timeline |
| Caseys General Stores |
| BLUESCOPE STEEL |
Caseys General and BLUESCOPE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and BLUESCOPE STEEL
The main advantage of trading using opposite Caseys General and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, BLUESCOPE STEEL 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 BLUESCOPE STEEL will offset losses from the drop in BLUESCOPE STEEL's long position.| Caseys General vs. TIANDE CHEMICAL | Caseys General vs. Eastman Chemical | Caseys General vs. Transportadora de Gas | Caseys General vs. GUILD ESPORTS PLC |
| BLUESCOPE STEEL vs. Perdoceo Education | BLUESCOPE STEEL vs. GLG LIFE TECH | BLUESCOPE STEEL vs. Kingdee International Software | BLUESCOPE STEEL vs. PKSHA TECHNOLOGY 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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