Correlation Between Cass Information and First Advantage
Can any of the company-specific risk be diversified away by investing in both Cass Information and First Advantage 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 First Advantage 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 First Advantage Corp, you can compare the effects of market volatilities on Cass Information and First Advantage 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 First Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and First Advantage.
Diversification Opportunities for Cass Information and First Advantage
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cass and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and First Advantage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Advantage 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 First Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Advantage Corp has no effect on the direction of Cass Information i.e., Cass Information and First Advantage go up and down completely randomly.
Pair Corralation between Cass Information and First Advantage
Given the investment horizon of 90 days Cass Information Systems is expected to generate 1.05 times more return on investment than First Advantage. However, Cass Information is 1.05 times more volatile than First Advantage Corp. It trades about 0.07 of its potential returns per unit of risk. First Advantage Corp is currently generating about 0.01 per unit of risk. If you would invest 4,091 in Cass Information Systems on November 1, 2024 and sell it today you would earn a total of 104.00 from holding Cass Information Systems or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. First Advantage Corp
Performance |
| Timeline |
| Cass Information Systems |
| First Advantage Corp |
Cass Information and First Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and First Advantage
The main advantage of trading using opposite Cass Information and First Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, First Advantage 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 First Advantage will offset losses from the drop in First Advantage's long position.| Cass Information vs. First Advantage Corp | Cass Information vs. Rentokil Initial PLC | Cass Information vs. CBIZ Inc | Cass Information vs. Civeo Corp |
| First Advantage vs. Discount Print USA | First Advantage vs. Cass Information Systems | First Advantage vs. Civeo Corp | First Advantage vs. Network 1 Technologies |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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