Correlation Between Apple and Caseys General

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

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

Diversification Opportunities for Apple and Caseys General

0.82

Correlation Coefficient

Apple  Caseys General

Very poor diversification

The 3 months correlation between Apple and Caseys is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Caseys General go up and down completely randomly.

Pair Corralation between Apple and Caseys General

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.9 times more return on investment than Caseys General. However, Apple Inc is 1.11 times less risky than Caseys General. It trades about 0.1 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.08 per unit of risk. If you would invest  12,116  in Apple Inc on September 16, 2024 and sell it today you would earn a total of  11,499  from holding Apple Inc or generate 94.91% return on investment over 90 days.

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

Apple Inc  vs.  Caseys General Stores

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Caseys General Stores

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 12 (%) 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 Apple and Caseys General

The main advantage of trading using opposite Apple and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.