Correlation Between Caseys General and Alimentation Couchen

Can any of the company-specific risk be diversified away by investing in both Caseys General and Alimentation Couchen 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 Alimentation Couchen 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 Alimentation Couchen Tard, you can compare the effects of market volatilities on Caseys General and Alimentation Couchen 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 Alimentation Couchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Alimentation Couchen.

Diversification Opportunities for Caseys General and Alimentation Couchen

0.77

Correlation Coefficient

Caseys General  Alimentation Couchen

Poor diversification

The 3 months correlation between Caseys and Alimentation is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Alimentation Couchen Tard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimentation Couchen Tard 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 Alimentation Couchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimentation Couchen Tard has no effect on the direction of Caseys General i.e., Caseys General and Alimentation Couchen go up and down completely randomly.

Pair Corralation between Caseys General and Alimentation Couchen

Given the investment horizon of 90 days Caseys General Stores is expected to under-perform the Alimentation Couchen. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 1.13 times less risky than Alimentation Couchen. The stock trades about -0.05 of its potential returns per unit of risk. The Alimentation Couchen Tard is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,447  in Alimentation Couchen Tard on October 7, 2024 and sell it today you would lose (34.00) from holding Alimentation Couchen Tard or give up 0.62% of portfolio value over 90 days.

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

Caseys General Stores  vs.  Alimentation Couchen Tard

Caseys General Stores

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 6 (%) 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.

Alimentation Couchen Tard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alimentation Couchen Tard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alimentation Couchen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caseys General and Alimentation Couchen

The main advantage of trading using opposite Caseys General and Alimentation Couchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Alimentation Couchen 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 Alimentation Couchen will offset losses from the drop in Alimentation Couchen's long position.

The idea behind Caseys General Stores and Alimentation Couchen Tard 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..