Correlation Between Caseys General and Build A

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

Diversification Opportunities for Caseys General and Build A

0.36

Correlation Coefficient

Caseys General  Build A

Weak diversification

The 3 months correlation between Caseys and Build is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Build A Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build A Bear 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 Build A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build A Bear has no effect on the direction of Caseys General i.e., Caseys General and Build A go up and down completely randomly.

Pair Corralation between Caseys General and Build A

Given the investment horizon of 90 days Caseys General Stores is expected to generate 2.02 times more return on investment than Build A. However, Caseys General is 2.02 times more volatile than Build A Bear Workshop. It trades about -0.12 of its potential returns per unit of risk. Build A Bear Workshop is currently generating about -0.33 per unit of risk. If you would invest  33,548  in Caseys General Stores on March 18, 2024 and sell it today you would lose (7,885) from holding Caseys General Stores or give up 23.5% of portfolio value over 90 days.

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

Caseys General Stores  vs.  Build A Bear Workshop

Caseys General Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caseys General Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Build A Bear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Build A Bear Workshop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in July 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Caseys General and Build A

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

The idea behind Caseys General Stores and Build A Bear Workshop 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.