Correlation Between Cass Information and Barrett Business
Can any of the company-specific risk be diversified away by investing in both Cass Information and Barrett Business 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 Cass Information and Barrett Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cass Information Systems and Barrett Business Services, you can compare the effects of market volatilities on Cass Information and Barrett Business 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 Cass Information with a short position of Barrett Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Barrett Business.
Diversification Opportunities for Cass Information and Barrett Business
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cass and Barrett is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Barrett Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrett Business Services and Cass Information 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 Cass Information Systems are associated (or correlated) with Barrett Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrett Business Services has no effect on the direction of Cass Information i.e., Cass Information and Barrett Business go up and down completely randomly.
Pair Corralation between Cass Information and Barrett Business
Given the investment horizon of 90 days Cass Information is expected to generate 1.74 times less return on investment than Barrett Business. In addition to that, Cass Information is 1.1 times more volatile than Barrett Business Services. It trades about 0.1 of its total potential returns per unit of risk. Barrett Business Services is currently generating about 0.19 per unit of volatility. If you would invest 3,744 in Barrett Business Services on August 31, 2024 and sell it today you would earn a total of 534.00 from holding Barrett Business Services or generate 14.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. Barrett Business Services
Performance |
| Timeline |
| Cass Information Systems |
| Barrett Business Services |
Cass Information and Barrett Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Barrett Business
The main advantage of trading using opposite Cass Information and Barrett Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Barrett Business 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 Barrett Business will offset losses from the drop in Barrett Business' long position.| Cass Information vs. Network 1 Technologies | Cass Information vs. Wilhelmina | Cass Information vs. Mader Group Limited | Cass Information vs. First Advantage Corp |
| Barrett Business vs. Korn Ferry | Barrett Business vs. Kelly Services A | Barrett Business vs. Kforce Inc | Barrett Business vs. Hudson Global |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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