Correlation Between Cass Information and National HealthCare
Can any of the company-specific risk be diversified away by investing in both Cass Information and National HealthCare 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 National HealthCare 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 National HealthCare, you can compare the effects of market volatilities on Cass Information and National HealthCare 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 National HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and National HealthCare.
Diversification Opportunities for Cass Information and National HealthCare
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cass and National is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and National HealthCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National HealthCare 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 National HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National HealthCare has no effect on the direction of Cass Information i.e., Cass Information and National HealthCare go up and down completely randomly.
Pair Corralation between Cass Information and National HealthCare
Given the investment horizon of 90 days Cass Information Systems is expected to generate 1.13 times more return on investment than National HealthCare. However, Cass Information is 1.13 times more volatile than National HealthCare. It trades about 0.02 of its potential returns per unit of risk. National HealthCare is currently generating about 0.02 per unit of risk. If you would invest 4,026 in Cass Information Systems on November 9, 2024 and sell it today you would earn a total of 286.00 from holding Cass Information Systems or generate 7.1% 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. National HealthCare
Performance |
| Timeline |
| Cass Information Systems |
| National HealthCare |
Cass Information and National HealthCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and National HealthCare
The main advantage of trading using opposite Cass Information and National HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, National HealthCare 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 National HealthCare will offset losses from the drop in National HealthCare'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 |
| National HealthCare vs. The Ensign Group | National HealthCare vs. US Physicalrapy | National HealthCare vs. Cass Information Systems | National HealthCare vs. Brookdale Senior Living |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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