Correlation Between Cass Information and DLH Holdings
Can any of the company-specific risk be diversified away by investing in both Cass Information and DLH Holdings 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 DLH Holdings 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 DLH Holdings Corp, you can compare the effects of market volatilities on Cass Information and DLH Holdings 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 DLH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and DLH Holdings.
Diversification Opportunities for Cass Information and DLH Holdings
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cass and DLH is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp 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 DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of Cass Information i.e., Cass Information and DLH Holdings go up and down completely randomly.
Pair Corralation between Cass Information and DLH Holdings
Given the investment horizon of 90 days Cass Information Systems is expected to generate 0.8 times more return on investment than DLH Holdings. However, Cass Information Systems is 1.24 times less risky than DLH Holdings. It trades about 0.08 of its potential returns per unit of risk. DLH Holdings Corp is currently generating about -0.06 per unit of risk. If you would invest 4,011 in Cass Information Systems on November 3, 2024 and sell it today you would earn a total of 108.00 from holding Cass Information Systems or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. DLH Holdings Corp
Performance |
| Timeline |
| Cass Information Systems |
| DLH Holdings Corp |
Cass Information and DLH Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and DLH Holdings
The main advantage of trading using opposite Cass Information and DLH Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, DLH Holdings 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 DLH Holdings will offset losses from the drop in DLH Holdings' long position.| Cass Information vs. First Advantage Corp | Cass Information vs. Rentokil Initial PLC | Cass Information vs. CBIZ Inc | Cass Information vs. Civeo Corp |
| DLH Holdings vs. First Advantage Corp | DLH Holdings vs. Discount Print USA | DLH Holdings vs. Cass Information Systems | DLH Holdings vs. Civeo Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |