Correlation Between Caseys General and Card Factory

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

Diversification Opportunities for Caseys General and Card Factory

-0.51

Correlation Coefficient

Caseys General  Card Factory

Excellent diversification

The 3 months correlation between Caseys and Card is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc 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 Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of Caseys General i.e., Caseys General and Card Factory go up and down completely randomly.

Pair Corralation between Caseys General and Card Factory

Given the investment horizon of 90 days Caseys General is expected to generate 16.79 times less return on investment than Card Factory. But when comparing it to its historical volatility, Caseys General Stores is 27.69 times less risky than Card Factory. It trades about 0.08 of its potential returns per unit of risk. Card Factory plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.26  in Card Factory plc on October 20, 2024 and sell it today you would earn a total of  112.74  from holding Card Factory plc or generate 4988.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Caseys General Stores  vs.  Card Factory plc

Caseys General Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caseys General Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Caseys General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Card Factory plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Card Factory plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Caseys General and Card Factory

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

The idea behind Caseys General Stores and Card Factory plc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.