Correlation Between Caseys General and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Caseys General and BRIT AMER 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 BRIT AMER 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 BRIT AMER TOBACCO, you can compare the effects of market volatilities on Caseys General and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and BRIT AMER.
Diversification Opportunities for Caseys General and BRIT AMER
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caseys and BRIT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Caseys General i.e., Caseys General and BRIT AMER go up and down completely randomly.
Pair Corralation between Caseys General and BRIT AMER
Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the BRIT AMER. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 1.26 times less risky than BRIT AMER. The stock trades about -0.23 of its potential returns per unit of risk. The BRIT AMER TOBACCO is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 3,865 in BRIT AMER TOBACCO on December 6, 2024 and sell it today you would lose (165.00) from holding BRIT AMER TOBACCO or give up 4.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Caseys General Stores vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Caseys General Stores |
| BRIT AMER TOBACCO |
Caseys General and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and BRIT AMER
The main advantage of trading using opposite Caseys General and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Caseys General vs. MELIA HOTELS | ||
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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