Correlation Between Caseys General and Transportadora
Can any of the company-specific risk be diversified away by investing in both Caseys General and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Caseys General and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Transportadora.
Diversification Opportunities for Caseys General and Transportadora
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Caseys and Transportadora is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Caseys General i.e., Caseys General and Transportadora go up and down completely randomly.
Pair Corralation between Caseys General and Transportadora
Assuming the 90 days trading horizon Caseys General is expected to generate 3.33 times less return on investment than Transportadora. But when comparing it to its historical volatility, Caseys General Stores is 2.75 times less risky than Transportadora. It trades about 0.16 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,870 in Transportadora de Gas on September 13, 2024 and sell it today you would earn a total of 790.00 from holding Transportadora de Gas or generate 42.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Transportadora de Gas
Performance |
| Timeline |
| Caseys General Stores |
| Transportadora de Gas |
Caseys General and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Transportadora
The main advantage of trading using opposite Caseys General and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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