Correlation Between CSP and Jack Henry
Can any of the company-specific risk be diversified away by investing in both CSP and Jack Henry 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 CSP and Jack Henry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSP Inc and Jack Henry Associates, you can compare the effects of market volatilities on CSP and Jack Henry 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 CSP with a short position of Jack Henry. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSP and Jack Henry.
Diversification Opportunities for CSP and Jack Henry
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSP and Jack is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc and Jack Henry Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Henry Associates and CSP 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 CSP Inc are associated (or correlated) with Jack Henry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Henry Associates has no effect on the direction of CSP i.e., CSP and Jack Henry go up and down completely randomly.
Pair Corralation between CSP and Jack Henry
Given the investment horizon of 90 days CSP Inc is expected to generate 2.7 times more return on investment than Jack Henry. However, CSP is 2.7 times more volatile than Jack Henry Associates. It trades about 0.24 of its potential returns per unit of risk. Jack Henry Associates is currently generating about -0.34 per unit of risk. If you would invest 1,252 in CSP Inc on August 24, 2024 and sell it today you would earn a total of 167.00 from holding CSP Inc or generate 13.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSP Inc vs. Jack Henry Associates
Performance |
| Timeline |
| CSP Inc |
| Jack Henry Associates |
CSP and Jack Henry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSP and Jack Henry
The main advantage of trading using opposite CSP and Jack Henry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSP position performs unexpectedly, Jack Henry 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 Jack Henry will offset losses from the drop in Jack Henry's long position.The idea behind CSP Inc and Jack Henry Associates pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Jack Henry vs. CACI International | Jack Henry vs. CDW Corp | Jack Henry vs. Broadridge Financial Solutions | Jack Henry vs. ExlService Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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