Correlation Between Caseys General and MarineMax

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

Diversification Opportunities for Caseys General and MarineMax

-0.24

Correlation Coefficient

Caseys General  MarineMax

Very good diversification

The 3 months correlation between Caseys and MarineMax is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax 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 MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Caseys General i.e., Caseys General and MarineMax go up and down completely randomly.

Pair Corralation between Caseys General and MarineMax

Given the investment horizon of 90 days Caseys General Stores is expected to generate 0.47 times more return on investment than MarineMax. However, Caseys General Stores is 2.14 times less risky than MarineMax. It trades about 0.17 of its potential returns per unit of risk. MarineMax is currently generating about 0.05 per unit of risk. If you would invest  35,447  in Caseys General Stores on September 1, 2024 and sell it today you would earn a total of  6,642  from holding Caseys General Stores or generate 18.74% return on investment over 90 days.

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

Caseys General Stores  vs.  MarineMax

Caseys General Stores

Risk-Adjusted Performance

13 of 100

Good

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

MarineMax

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MarineMax are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, MarineMax may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Caseys General and MarineMax

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

The idea behind Caseys General Stores and MarineMax 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.