Correlation Between Caseys General and GEAR4MUSIC

Can any of the company-specific risk be diversified away by investing in both Caseys General and GEAR4MUSIC 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 GEAR4MUSIC 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 GEAR4MUSIC LS 10, you can compare the effects of market volatilities on Caseys General and GEAR4MUSIC 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 GEAR4MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and GEAR4MUSIC.

Diversification Opportunities for Caseys General and GEAR4MUSIC

-0.16

Correlation Coefficient

Caseys General  GEAR4MUSIC

Good diversification

The 3 months correlation between Caseys and GEAR4MUSIC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC LS 10 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 GEAR4MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC LS 10 has no effect on the direction of Caseys General i.e., Caseys General and GEAR4MUSIC go up and down completely randomly.

Pair Corralation between Caseys General and GEAR4MUSIC

Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.27 times more return on investment than GEAR4MUSIC. However, Caseys General Stores is 3.66 times less risky than GEAR4MUSIC. It trades about 0.06 of its potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about -0.2 per unit of risk. If you would invest  38,600  in Caseys General Stores on October 26, 2024 and sell it today you would earn a total of  400.00  from holding Caseys General Stores or generate 1.04% 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.  GEAR4MUSIC LS 10

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 comparatively uncertain basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GEAR4MUSIC LS 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEAR4MUSIC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Caseys General and GEAR4MUSIC

The main advantage of trading using opposite Caseys General and GEAR4MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, GEAR4MUSIC 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 GEAR4MUSIC will offset losses from the drop in GEAR4MUSIC's long position.

The idea behind Caseys General Stores and GEAR4MUSIC LS 10 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.