Correlation Between Genuine Parts and Caseys General
Can any of the company-specific risk be diversified away by investing in both Genuine Parts and Caseys General 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 Genuine Parts and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and Caseys General Stores, you can compare the effects of market volatilities on Genuine Parts and Caseys General 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 Genuine Parts with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Caseys General.
Diversification Opportunities for Genuine Parts and Caseys General
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Genuine and Caseys is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores and Genuine Parts 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 Genuine Parts Co are associated (or correlated) with Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Genuine Parts i.e., Genuine Parts and Caseys General go up and down completely randomly.
Pair Corralation between Genuine Parts and Caseys General
Considering the 90-day investment horizon Genuine Parts Co is expected to generate 1.09 times more return on investment than Caseys General. However, Genuine Parts is 1.09 times more volatile than Caseys General Stores. It trades about 0.24 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.19 per unit of risk. If you would invest 11,835 in Genuine Parts Co on August 28, 2024 and sell it today you would earn a total of 1,112 from holding Genuine Parts Co or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genuine Parts Co vs. Caseys General Stores
Performance |
| Timeline |
| Genuine Parts |
| Caseys General Stores |
Genuine Parts and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and Caseys General
The main advantage of trading using opposite Genuine Parts and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts position performs unexpectedly, Caseys General 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 Caseys General will offset losses from the drop in Caseys General's long position.| Genuine Parts vs. Steven Madden | Genuine Parts vs. Vera Bradley | Genuine Parts vs. Caleres | Genuine Parts vs. Rocky Brands |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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