Correlation Between APPLIED MATERIALS and Caseys General

Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between APPLIED MATERIALS and Caseys General Stores, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Caseys General.

Diversification Opportunities for APPLIED MATERIALS and Caseys General

0.5

Correlation Coefficient

APPLIED MATERIALS  Caseys General

Very weak diversification

The 3 months correlation between APPLIED and Caseys is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and Caseys General go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and Caseys General

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the Caseys General. In addition to that, APPLIED MATERIALS is 1.41 times more volatile than Caseys General Stores. It trades about -0.08 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.04 per unit of volatility. If you would invest  38,352  in Caseys General Stores on December 30, 2024 and sell it today you would earn a total of  1,448  from holding Caseys General Stores or generate 3.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

APPLIED MATERIALS  vs.  Caseys General Stores

APPLIED MATERIALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days APPLIED MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Caseys General Stores

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caseys General is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with APPLIED MATERIALS and Caseys General

The main advantage of trading using opposite APPLIED MATERIALS and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.

The idea behind APPLIED MATERIALS and Caseys General Stores pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.