Correlation Between Caseys General and Suncorp Group

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

Diversification Opportunities for Caseys General and Suncorp Group

0.64

Correlation Coefficient

Caseys General  Suncorp Group

Poor diversification

The 3 months correlation between Caseys and Suncorp is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited 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 Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of Caseys General i.e., Caseys General and Suncorp Group go up and down completely randomly.

Pair Corralation between Caseys General and Suncorp Group

Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the Suncorp Group. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 2.15 times less risky than Suncorp Group. The stock trades about -0.23 of its potential returns per unit of risk. The Suncorp Group Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,140  in Suncorp Group Limited on October 12, 2024 and sell it today you would earn a total of  10.00  from holding Suncorp Group Limited or generate 0.88% return on investment over 90 days.

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

Caseys General Stores  vs.  Suncorp Group Limited

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

Suncorp Group Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Suncorp Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caseys General and Suncorp Group

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

The idea behind Caseys General Stores and Suncorp Group Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.