Correlation Between Barnes Noble and Caseys General

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

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

Diversification Opportunities for Barnes Noble and Caseys General

0.68

Correlation Coefficient

Barnes Noble  Caseys General

Poor diversification

The 3 months correlation between Barnes and Caseys is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Noble Education 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 Barnes Noble 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 Barnes Noble Education 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 Barnes Noble i.e., Barnes Noble and Caseys General go up and down completely randomly.

Pair Corralation between Barnes Noble and Caseys General

Given the investment horizon of 90 days Barnes Noble Education is expected to generate 4.26 times more return on investment than Caseys General. However, Barnes Noble is 4.26 times more volatile than Caseys General Stores. It trades about 0.06 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.07 per unit of risk. If you would invest  900.00  in Barnes Noble Education on October 5, 2024 and sell it today you would earn a total of  104.00  from holding Barnes Noble Education or generate 11.56% return on investment over 90 days.

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

Barnes Noble Education  vs.  Caseys General Stores

Barnes Noble Education

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Noble Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Barnes Noble exhibited solid returns over the last few months and may actually be approaching a breakup point.

Caseys General Stores

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Barnes Noble and Caseys General

The main advantage of trading using opposite Barnes Noble and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes Noble 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 Barnes Noble Education 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.