Correlation Between Cass Information and TERADATA
Can any of the company-specific risk be diversified away by investing in both Cass Information and TERADATA 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 TERADATA 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 TERADATA, you can compare the effects of market volatilities on Cass Information and TERADATA 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 TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and TERADATA.
Diversification Opportunities for Cass Information and TERADATA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cass and TERADATA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA 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 TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of Cass Information i.e., Cass Information and TERADATA go up and down completely randomly.
Pair Corralation between Cass Information and TERADATA
Assuming the 90 days horizon Cass Information Systems is expected to generate 1.16 times more return on investment than TERADATA. However, Cass Information is 1.16 times more volatile than TERADATA. It trades about 0.15 of its potential returns per unit of risk. TERADATA is currently generating about -0.04 per unit of risk. If you would invest 3,960 in Cass Information Systems on August 31, 2024 and sell it today you would earn a total of 260.00 from holding Cass Information Systems or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cass Information Systems vs. TERADATA
Performance |
| Timeline |
| Cass Information Systems |
| TERADATA |
Cass Information and TERADATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and TERADATA
The main advantage of trading using opposite Cass Information and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, TERADATA 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 TERADATA will offset losses from the drop in TERADATA's long position.| Cass Information vs. Singapore Telecommunications Limited | Cass Information vs. SBA Communications Corp | Cass Information vs. Tower One Wireless | Cass Information vs. Verizon Communications |
| TERADATA vs. Hyster Yale Materials Handling | TERADATA vs. Martin Marietta Materials | TERADATA vs. Applied Materials | TERADATA vs. Sumitomo Rubber Industries |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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