Correlation Between Sprouts Farmers and Caseys General
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers 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 Sprouts Farmers and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Caseys General Stores, you can compare the effects of market volatilities on Sprouts Farmers 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 Sprouts Farmers with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Caseys General.
Diversification Opportunities for Sprouts Farmers and Caseys General
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sprouts and Caseys is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market 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 Sprouts Farmers 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 Sprouts Farmers Market 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 Sprouts Farmers i.e., Sprouts Farmers and Caseys General go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Caseys General
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 1.48 times more return on investment than Caseys General. However, Sprouts Farmers is 1.48 times more volatile than Caseys General Stores. It trades about 0.13 of its potential returns per unit of risk. Caseys General Stores is currently generating about -0.1 per unit of risk. If you would invest 6,343 in Sprouts Farmers Market on January 24, 2024 and sell it today you would earn a total of 206.00 from holding Sprouts Farmers Market or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Caseys General Stores
Performance |
| Timeline |
| Sprouts Farmers Market |
| Caseys General Stores |
Sprouts Farmers and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Caseys General
The main advantage of trading using opposite Sprouts Farmers and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers 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.| Sprouts Farmers vs. Big Lots | Sprouts Farmers vs. Aquagold International | Sprouts Farmers vs. Thrivent High Yield | Sprouts Farmers vs. Morningstar Unconstrained Allocation |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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