Correlation Between Cass Information and American States
Can any of the company-specific risk be diversified away by investing in both Cass Information and American States 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 American States 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 American States Water, you can compare the effects of market volatilities on Cass Information and American States 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 American States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and American States.
Diversification Opportunities for Cass Information and American States
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cass and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water 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 American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of Cass Information i.e., Cass Information and American States go up and down completely randomly.
Pair Corralation between Cass Information and American States
Assuming the 90 days horizon Cass Information Systems is expected to under-perform the American States. But the stock apears to be less risky and, when comparing its historical volatility, Cass Information Systems is 1.06 times less risky than American States. The stock trades about -0.14 of its potential returns per unit of risk. The American States Water is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 8,008 in American States Water on September 13, 2024 and sell it today you would lose (203.00) from holding American States Water or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. American States Water
Performance |
| Timeline |
| Cass Information Systems |
| American States Water |
Cass Information and American States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and American States
The main advantage of trading using opposite Cass Information and American States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, American States 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 American States will offset losses from the drop in American States' long position.| Cass Information vs. Tradegate AG Wertpapierhandelsbank | Cass Information vs. Guidewire Software | Cass Information vs. PT Bank Maybank | Cass Information vs. REVO INSURANCE SPA |
| American States vs. Fevertree Drinks PLC | American States vs. Neinor Homes SA | American States vs. CENTURIA OFFICE REIT | American States vs. Addus HomeCare |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |