Correlation Between Caseys General and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Caseys General and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Caseys General and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Ross Stores.
Diversification Opportunities for Caseys General and Ross Stores
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caseys and Ross is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Caseys General i.e., Caseys General and Ross Stores go up and down completely randomly.
Pair Corralation between Caseys General and Ross Stores
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.89 times more return on investment than Ross Stores. However, Caseys General Stores is 1.12 times less risky than Ross Stores. It trades about -0.03 of its potential returns per unit of risk. Ross Stores is currently generating about -0.19 per unit of risk. If you would invest 38,600 in Caseys General Stores on October 25, 2024 and sell it today you would lose (200.00) from holding Caseys General Stores or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Ross Stores
Performance |
| Timeline |
| Caseys General Stores |
| Ross Stores |
Caseys General and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Ross Stores
The main advantage of trading using opposite Caseys General and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
| Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Apple 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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