Correlation Between Cass Information and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Cass Information and Rio Tinto 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 Rio Tinto 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 Rio Tinto Group, you can compare the effects of market volatilities on Cass Information and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Rio Tinto.
Diversification Opportunities for Cass Information and Rio Tinto
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cass and Rio is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of Cass Information i.e., Cass Information and Rio Tinto go up and down completely randomly.
Pair Corralation between Cass Information and Rio Tinto
Assuming the 90 days horizon Cass Information is expected to generate 12.09 times less return on investment than Rio Tinto. But when comparing it to its historical volatility, Cass Information Systems is 1.04 times less risky than Rio Tinto. It trades about 0.01 of its potential returns per unit of risk. Rio Tinto Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,800 in Rio Tinto Group on September 12, 2024 and sell it today you would earn a total of 300.00 from holding Rio Tinto Group or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. Rio Tinto Group
Performance |
| Timeline |
| Cass Information Systems |
| Rio Tinto Group |
Cass Information and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Rio Tinto
The main advantage of trading using opposite Cass Information and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Cass Information vs. Cintas | Cass Information vs. RELO GROUP INC | Cass Information vs. Superior Plus Corp | Cass Information vs. SIVERS SEMICONDUCTORS AB |
| Rio Tinto vs. Cass Information Systems | Rio Tinto vs. Treasury Wine Estates | Rio Tinto vs. National Storage Affiliates | Rio Tinto vs. TITAN MACHINERY |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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