Correlation Between Caseys General and T MOBILE

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

Diversification Opportunities for Caseys General and T MOBILE

0.92

Correlation Coefficient

Caseys General  T MOBILE

Almost no diversification

The 3 months correlation between Caseys and TM5 is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US 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 T MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of Caseys General i.e., Caseys General and T MOBILE go up and down completely randomly.

Pair Corralation between Caseys General and T MOBILE

Assuming the 90 days trading horizon Caseys General is expected to generate 1.03 times less return on investment than T MOBILE. In addition to that, Caseys General is 1.06 times more volatile than T MOBILE US. It trades about 0.14 of its total potential returns per unit of risk. T MOBILE US is currently generating about 0.15 per unit of volatility. If you would invest  18,540  in T MOBILE US on September 28, 2024 and sell it today you would earn a total of  2,775  from holding T MOBILE US or generate 14.97% return on investment over 90 days.

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

Caseys General Stores  vs.  T MOBILE US

Caseys General Stores

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 10 (%) 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.

T MOBILE US

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Caseys General and T MOBILE

The main advantage of trading using opposite Caseys General and T MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, T MOBILE 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 T MOBILE will offset losses from the drop in T MOBILE's long position.

The idea behind Caseys General Stores and T MOBILE US 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .