Correlation Between Charles Schwab and Caseys General

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

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

Diversification Opportunities for Charles Schwab and Caseys General

0.9

Correlation Coefficient

Charles Schwab  Caseys General

Almost no diversification

The 3 months correlation between Charles and Caseys is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Charles Schwab Corp 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 Charles Schwab 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 Charles Schwab Corp 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 Charles Schwab i.e., Charles Schwab and Caseys General go up and down completely randomly.

Pair Corralation between Charles Schwab and Caseys General

Given the investment horizon of 90 days Charles Schwab Corp is expected to generate 1.26 times more return on investment than Caseys General. However, Charles Schwab is 1.26 times more volatile than Caseys General Stores. It trades about 0.23 of its potential returns per unit of risk. Caseys General Stores is currently generating about -0.06 per unit of risk. If you would invest  7,133  in Charles Schwab Corp on January 25, 2024 and sell it today you would earn a total of  386.00  from holding Charles Schwab Corp or generate 5.41% return on investment over 90 days.

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

Charles Schwab Corp  vs.  Caseys General Stores

Charles Schwab Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Schwab Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Caseys General Stores

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Charles Schwab and Caseys General

The main advantage of trading using opposite Charles Schwab and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Schwab 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 Charles Schwab Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..