Correlation Between Caseys General and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Caseys General and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Caseys General and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Arch Capital.
Diversification Opportunities for Caseys General and Arch Capital
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caseys and Arch is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Caseys General i.e., Caseys General and Arch Capital go up and down completely randomly.
Pair Corralation between Caseys General and Arch Capital
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.74 times more return on investment than Arch Capital. However, Caseys General Stores is 1.35 times less risky than Arch Capital. It trades about 0.21 of its potential returns per unit of risk. Arch Capital Group is currently generating about 0.07 per unit of risk. If you would invest 36,150 in Caseys General Stores on September 1, 2024 and sell it today you would earn a total of 3,450 from holding Caseys General Stores or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Arch Capital Group
Performance |
| Timeline |
| Caseys General Stores |
| Arch Capital Group |
Caseys General and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Arch Capital
The main advantage of trading using opposite Caseys General and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
| Arch Capital vs. GRIFFIN MINING LTD | Arch Capital vs. Ross Stores | Arch Capital vs. Fast Retailing Co | Arch Capital 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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