Correlation Between Caseys General and Sprouts Farmers
Can any of the company-specific risk be diversified away by investing in both Caseys General and Sprouts Farmers 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 Sprouts Farmers 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 Sprouts Farmers Market, you can compare the effects of market volatilities on Caseys General and Sprouts Farmers 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 Sprouts Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Sprouts Farmers.
Diversification Opportunities for Caseys General and Sprouts Farmers
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Caseys and Sprouts is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Sprouts Farmers Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprouts Farmers Market 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 Sprouts Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprouts Farmers Market has no effect on the direction of Caseys General i.e., Caseys General and Sprouts Farmers go up and down completely randomly.
Pair Corralation between Caseys General and Sprouts Farmers
Given the investment horizon of 90 days Caseys General is expected to generate 25.45 times less return on investment than Sprouts Farmers. But when comparing it to its historical volatility, Caseys General Stores is 3.56 times less risky than Sprouts Farmers. It trades about 0.03 of its potential returns per unit of risk. Sprouts Farmers Market is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,329 in Sprouts Farmers Market on February 3, 2024 and sell it today you would earn a total of 871.00 from holding Sprouts Farmers Market or generate 13.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Caseys General Stores vs. Sprouts Farmers Market
Performance |
Timeline |
Caseys General Stores |
Sprouts Farmers Market |
Caseys General and Sprouts Farmers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caseys General and Sprouts Farmers
The main advantage of trading using opposite Caseys General and Sprouts Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Sprouts Farmers 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 Sprouts Farmers will offset losses from the drop in Sprouts Farmers' long position.Caseys General vs. BJs Wholesale Club | Caseys General vs. Dollar General | Caseys General vs. Grocery Outlet Holding | Caseys General vs. Kroger Company |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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