Correlation Between Auto Trader and Caseys General
Can any of the company-specific risk be diversified away by investing in both Auto Trader 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 Auto Trader and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Caseys General Stores, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Caseys General.
Diversification Opportunities for Auto Trader and Caseys General
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and Caseys is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group 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 Auto Trader 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 Auto Trader Group 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 Auto Trader i.e., Auto Trader and Caseys General go up and down completely randomly.
Pair Corralation between Auto Trader and Caseys General
Assuming the 90 days trading horizon Auto Trader is expected to generate 24.69 times less return on investment than Caseys General. But when comparing it to its historical volatility, Auto Trader Group is 1.14 times less risky than Caseys General. It trades about 0.01 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 33,554 in Caseys General Stores on September 11, 2024 and sell it today you would earn a total of 6,246 from holding Caseys General Stores or generate 18.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Auto Trader Group vs. Caseys General Stores
Performance |
Timeline |
Auto Trader Group |
Caseys General Stores |
Auto Trader and Caseys General Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Auto Trader and Caseys General
The main advantage of trading using opposite Auto Trader and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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.Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
Caseys General vs. LIFENET INSURANCE CO | Caseys General vs. Singapore Reinsurance | Caseys General vs. Zurich Insurance Group | Caseys General vs. Direct Line Insurance |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |