Correlation Between Caseys General and TELECOM ITALIA
Can any of the company-specific risk be diversified away by investing in both Caseys General and TELECOM ITALIA 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 TELECOM ITALIA 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 TELECOM ITALIA, you can compare the effects of market volatilities on Caseys General and TELECOM ITALIA 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 TELECOM ITALIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and TELECOM ITALIA.
Diversification Opportunities for Caseys General and TELECOM ITALIA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caseys and TELECOM is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and TELECOM ITALIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM ITALIA 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 TELECOM ITALIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELECOM ITALIA has no effect on the direction of Caseys General i.e., Caseys General and TELECOM ITALIA go up and down completely randomly.
Pair Corralation between Caseys General and TELECOM ITALIA
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.57 times more return on investment than TELECOM ITALIA. However, Caseys General Stores is 1.75 times less risky than TELECOM ITALIA. It trades about 0.1 of its potential returns per unit of risk. TELECOM ITALIA is currently generating about 0.02 per unit of risk. If you would invest 25,461 in Caseys General Stores on December 3, 2024 and sell it today you would earn a total of 13,539 from holding Caseys General Stores or generate 53.18% 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. TELECOM ITALIA
Performance |
| Timeline |
| Caseys General Stores |
| TELECOM ITALIA |
Caseys General and TELECOM ITALIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and TELECOM ITALIA
The main advantage of trading using opposite Caseys General and TELECOM ITALIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, TELECOM ITALIA 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 TELECOM ITALIA will offset losses from the drop in TELECOM ITALIA's long position.| Caseys General vs. SBI Insurance Group | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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