Correlation Between Caseys General and Take-Two Interactive

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

Diversification Opportunities for Caseys General and Take-Two Interactive

0.24

Correlation Coefficient

Caseys General  Take-Two Interactive

Modest diversification

The 3 months correlation between Caseys and Take-Two is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take-Two Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Caseys General i.e., Caseys General and Take-Two Interactive go up and down completely randomly.

Pair Corralation between Caseys General and Take-Two Interactive

Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the Take-Two Interactive. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 1.3 times less risky than Take-Two Interactive. The stock trades about -0.06 of its potential returns per unit of risk. The Take Two Interactive Software is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17,512  in Take Two Interactive Software on December 21, 2024 and sell it today you would earn a total of  1,446  from holding Take Two Interactive Software or generate 8.26% return on investment over 90 days.

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

Caseys General Stores  vs.  Take Two Interactive Software

Caseys General Stores

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Take Two Interactive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Take-Two Interactive may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Caseys General and Take-Two Interactive

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

The idea behind Caseys General Stores and Take Two Interactive Software 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.