Correlation Between Cass Information and Big 5
Can any of the company-specific risk be diversified away by investing in both Cass Information and Big 5 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 Big 5 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 Big 5 Sporting, you can compare the effects of market volatilities on Cass Information and Big 5 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 Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Big 5.
Diversification Opportunities for Cass Information and Big 5
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cass and Big is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting 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 Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Cass Information i.e., Cass Information and Big 5 go up and down completely randomly.
Pair Corralation between Cass Information and Big 5
Assuming the 90 days horizon Cass Information Systems is expected to generate 0.46 times more return on investment than Big 5. However, Cass Information Systems is 2.16 times less risky than Big 5. It trades about 0.18 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.1 per unit of risk. If you would invest 3,840 in Cass Information Systems on August 25, 2024 and sell it today you would earn a total of 320.00 from holding Cass Information Systems or generate 8.33% 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. Big 5 Sporting
Performance |
| Timeline |
| Cass Information Systems |
| Big 5 Sporting |
Cass Information and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Big 5
The main advantage of trading using opposite Cass Information and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| Cass Information vs. National Health Investors | Cass Information vs. Digilife Technologies Limited | Cass Information vs. Sabra Health Care | Cass Information vs. Sunny Optical Technology |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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