Correlation Between Caseys General and Quaker Chemical

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

Diversification Opportunities for Caseys General and Quaker Chemical

0.19

Correlation Coefficient

Caseys General  Quaker Chemical

Average diversification

The 3 months correlation between Caseys and Quaker is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Caseys General i.e., Caseys General and Quaker Chemical go up and down completely randomly.

Pair Corralation between Caseys General and Quaker Chemical

Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.64 times more return on investment than Quaker Chemical. However, Caseys General Stores is 1.57 times less risky than Quaker Chemical. It trades about 0.12 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.1 per unit of risk. If you would invest  36,000  in Caseys General Stores on October 6, 2024 and sell it today you would earn a total of  2,600  from holding Caseys General Stores or generate 7.22% return on investment over 90 days.

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

Caseys General Stores  vs.  Quaker Chemical

Caseys General Stores

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

Quaker Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quaker Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 Quaker Chemical

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

The idea behind Caseys General Stores and Quaker Chemical 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 Global Correlations module to find global opportunities by holding instruments from different markets.