Correlation Between Caseys General and JAPAN TOBACCO

Can any of the company-specific risk be diversified away by investing in both Caseys General and JAPAN TOBACCO 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Caseys General and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and JAPAN TOBACCO.

Diversification Opportunities for Caseys General and JAPAN TOBACCO

-0.74

Correlation Coefficient

Caseys General  JAPAN TOBACCO

Pay attention - limited upside

The 3 months correlation between Caseys and JAPAN is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of Caseys General i.e., Caseys General and JAPAN TOBACCO go up and down completely randomly.

Pair Corralation between Caseys General and JAPAN TOBACCO

Assuming the 90 days trading horizon Caseys General Stores is expected to generate 1.58 times more return on investment than JAPAN TOBACCO. However, Caseys General is 1.58 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.09 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about -0.05 per unit of risk. If you would invest  38,558  in Caseys General Stores on April 20, 2025 and sell it today you would earn a total of  4,842  from holding Caseys General Stores or generate 12.56% return on investment over 90 days.

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

Caseys General Stores  vs.  JAPAN TOBACCO UNSPADR12

Caseys General Stores

Risk-Adjusted Performance

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

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

Very Weak

Over the last 90 days JAPAN TOBACCO UNSPADR12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JAPAN TOBACCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caseys General and JAPAN TOBACCO

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

The idea behind Caseys General Stores and JAPAN TOBACCO UNSPADR12 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.