Correlation Between Dassault Systmes and Caseys General

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

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

Diversification Opportunities for Dassault Systmes and Caseys General

-0.67

Correlation Coefficient

Dassault Systmes  Caseys General

Excellent diversification

The 3 months correlation between Dassault and Caseys is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systmes SE 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 Dassault Systmes 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 Dassault Systmes SE 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 Dassault Systmes i.e., Dassault Systmes and Caseys General go up and down completely randomly.

Pair Corralation between Dassault Systmes and Caseys General

Assuming the 90 days horizon Dassault Systmes SE is expected to under-perform the Caseys General. But the stock apears to be less risky and, when comparing its historical volatility, Dassault Systmes SE is 1.11 times less risky than Caseys General. The stock trades about -0.02 of its potential returns per unit of risk. The Caseys General Stores is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  34,153  in Caseys General Stores on September 12, 2024 and sell it today you would earn a total of  5,047  from holding Caseys General Stores or generate 14.78% return on investment over 90 days.

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

Dassault Systmes SE  vs.  Caseys General Stores

Dassault Systmes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dassault Systmes SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dassault Systmes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 uncertain basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dassault Systmes and Caseys General

The main advantage of trading using opposite Dassault Systmes and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systmes 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 Dassault Systmes SE 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.