Correlation Between Cass Information and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both Cass Information and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics, you can compare the effects of market volatilities on Cass Information and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Renesas Electronics.
Diversification Opportunities for Cass Information and Renesas Electronics
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cass and Renesas is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of Cass Information i.e., Cass Information and Renesas Electronics go up and down completely randomly.
Pair Corralation between Cass Information and Renesas Electronics
Assuming the 90 days horizon Cass Information Systems is expected to under-perform the Renesas Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Cass Information Systems is 1.8 times less risky than Renesas Electronics. The stock trades about -0.07 of its potential returns per unit of risk. The Renesas Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,216 in Renesas Electronics on September 22, 2024 and sell it today you would lose (1.00) from holding Renesas Electronics or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. Renesas Electronics
Performance |
| Timeline |
| Cass Information Systems |
| Renesas Electronics |
Cass Information and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Renesas Electronics
The main advantage of trading using opposite Cass Information and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' long position.| Cass Information vs. Cintas | Cass Information vs. RENTOKIL INITIAL ADR5 | Cass Information vs. INPOST SA EO | Cass Information vs. Elis SA |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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