Correlation Between Caseys General and Leslies

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

Diversification Opportunities for Caseys General and Leslies

-0.04

Correlation Coefficient

Caseys General  Leslies

Good diversification

The 3 months correlation between Caseys and Leslies is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies 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 Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of Caseys General i.e., Caseys General and Leslies go up and down completely randomly.

Pair Corralation between Caseys General and Leslies

Given the investment horizon of 90 days Caseys General Stores is expected to generate 0.35 times more return on investment than Leslies. However, Caseys General Stores is 2.89 times less risky than Leslies. It trades about 0.08 of its potential returns per unit of risk. Leslies is currently generating about -0.25 per unit of risk. If you would invest  39,823  in Caseys General Stores on December 29, 2024 and sell it today you would earn a total of  3,377  from holding Caseys General Stores or generate 8.48% return on investment over 90 days.

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

Caseys General Stores  vs.  Leslies

Caseys General Stores

Risk-Adjusted Performance

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 April 2025.

Leslies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leslies 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Caseys General and Leslies

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

The idea behind Caseys General Stores and Leslies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.