Correlation Between Cass Information and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both Cass Information and AUTO TRADER 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 AUTO TRADER 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 AUTO TRADER ADR, you can compare the effects of market volatilities on Cass Information and AUTO TRADER 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 AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and AUTO TRADER.
Diversification Opportunities for Cass Information and AUTO TRADER
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cass and AUTO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR 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 AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of Cass Information i.e., Cass Information and AUTO TRADER go up and down completely randomly.
Pair Corralation between Cass Information and AUTO TRADER
Assuming the 90 days horizon Cass Information is expected to generate 7.97 times less return on investment than AUTO TRADER. In addition to that, Cass Information is 1.14 times more volatile than AUTO TRADER ADR. It trades about 0.01 of its total potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.06 per unit of volatility. If you would invest 154.00 in AUTO TRADER ADR on October 14, 2024 and sell it today you would earn a total of 76.00 from holding AUTO TRADER ADR or generate 49.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. AUTO TRADER ADR
Performance |
| Timeline |
| Cass Information Systems |
| AUTO TRADER ADR |
Cass Information and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and AUTO TRADER
The main advantage of trading using opposite Cass Information and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| Cass Information vs. Gladstone Investment | Cass Information vs. Zoom Video Communications | Cass Information vs. Scottish Mortgage Investment | Cass Information vs. Apollo Investment Corp |
| AUTO TRADER vs. Teradata Corp | AUTO TRADER vs. Cass Information Systems | AUTO TRADER vs. Keck Seng Investments | AUTO TRADER vs. Alliance Data Systems |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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