Correlation Between CARSALES and Caseys General

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

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

Diversification Opportunities for CARSALES and Caseys General

0.35

Correlation Coefficient

CARSALES  Caseys General

Weak diversification

The 3 months correlation between CARSALES and Caseys is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALES 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 CARSALESCOM 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 CARSALES i.e., CARSALES and Caseys General go up and down completely randomly.

Pair Corralation between CARSALES and Caseys General

Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.63 times more return on investment than Caseys General. However, CARSALESCOM is 1.59 times less risky than Caseys General. It trades about 0.17 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.09 per unit of risk. If you would invest  1,780  in CARSALESCOM on April 20, 2025 and sell it today you would earn a total of  320.00  from holding CARSALESCOM or generate 17.98% return on investment over 90 days.

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

CARSALESCOM  vs.  Caseys General Stores

CARSALESCOM

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CARSALES exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with CARSALES and Caseys General

The main advantage of trading using opposite CARSALES and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES 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 CARSALESCOM 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.