Correlation Between Caseys General and UTD OV

Can any of the company-specific risk be diversified away by investing in both Caseys General and UTD OV 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 UTD OV 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 UTD OV BK LOC ADR1, you can compare the effects of market volatilities on Caseys General and UTD OV 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 UTD OV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and UTD OV.

Diversification Opportunities for Caseys General and UTD OV

0.8

Correlation Coefficient

Caseys General  UTD OV

Very poor diversification

The 3 months correlation between Caseys and UTD is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and UTD OV BK LOC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTD OV BK 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 UTD OV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTD OV BK has no effect on the direction of Caseys General i.e., Caseys General and UTD OV go up and down completely randomly.

Pair Corralation between Caseys General and UTD OV

Assuming the 90 days trading horizon Caseys General is expected to generate 2.02 times less return on investment than UTD OV. But when comparing it to its historical volatility, Caseys General Stores is 1.14 times less risky than UTD OV. It trades about 0.12 of its potential returns per unit of risk. UTD OV BK LOC ADR1 is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,400  in UTD OV BK LOC ADR1 on October 6, 2024 and sell it today you would earn a total of  700.00  from holding UTD OV BK LOC ADR1 or generate 15.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.5%
Values	Daily Returns

Caseys General Stores  vs.  UTD OV BK LOC ADR1

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 fragile basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

UTD OV BK

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UTD OV BK LOC ADR1 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, UTD OV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caseys General and UTD OV

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

The idea behind Caseys General Stores and UTD OV BK LOC ADR1 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.