Correlation Between Parkland and Caseys General

Can any of the company-specific risk be diversified away by investing in both Parkland and Caseys General 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 Parkland and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Parkland and Caseys General Stores, you can compare the effects of market volatilities on Parkland and Caseys General 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 Parkland with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkland and Caseys General.

Diversification Opportunities for Parkland and Caseys General

-0.35

Correlation Coefficient

Parkland  Caseys General

Very good diversification

The 3 months correlation between Parkland and Caseys is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Parkland and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores and Parkland 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 Parkland are associated (or correlated) with Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Parkland i.e., Parkland and Caseys General go up and down completely randomly.

Pair Corralation between Parkland and Caseys General

Assuming the 90 days horizon Parkland is expected to under-perform the Caseys General. In addition to that, Parkland is 1.21 times more volatile than Caseys General Stores. It trades about -0.05 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.09 per unit of volatility. If you would invest  27,547  in Caseys General Stores on September 28, 2024 and sell it today you would earn a total of  12,896  from holding Caseys General Stores or generate 46.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Parkland  vs.  Caseys General Stores

Parkland

Risk-Adjusted Performance

0 of 100

Very Weak

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

Caseys General Stores

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Parkland and Caseys General

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

The idea behind Parkland and Caseys General Stores 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.