Correlation Between Caseys General and AXWAY SOFTWARE

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

Diversification Opportunities for Caseys General and AXWAY SOFTWARE

0.85

Correlation Coefficient

Caseys General  AXWAY SOFTWARE

Very poor diversification

The 3 months correlation between Caseys and AXWAY is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and AXWAY SOFTWARE EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXWAY SOFTWARE EO 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 AXWAY SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXWAY SOFTWARE EO has no effect on the direction of Caseys General i.e., Caseys General and AXWAY SOFTWARE go up and down completely randomly.

Pair Corralation between Caseys General and AXWAY SOFTWARE

Assuming the 90 days trading horizon Caseys General Stores is expected to generate 1.28 times more return on investment than AXWAY SOFTWARE. However, Caseys General is 1.28 times more volatile than AXWAY SOFTWARE EO. It trades about 0.15 of its potential returns per unit of risk. AXWAY SOFTWARE EO is currently generating about 0.18 per unit of risk. If you would invest  33,753  in Caseys General Stores on September 23, 2024 and sell it today you would earn a total of  5,447  from holding Caseys General Stores or generate 16.14% return on investment over 90 days.

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

Caseys General Stores  vs.  AXWAY SOFTWARE EO

Caseys General Stores

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

AXWAY SOFTWARE EO

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AXWAY SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caseys General and AXWAY SOFTWARE

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

The idea behind Caseys General Stores and AXWAY SOFTWARE EO 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.