Correlation Between Cadence Bancorp and Edenred Malakoff

Can any of the company-specific risk be diversified away by investing in both Cadence Bancorp and Edenred Malakoff 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 Cadence Bancorp and Edenred Malakoff into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cadence Bancorp and Edenred Malakoff ADR, you can compare the effects of market volatilities on Cadence Bancorp and Edenred Malakoff 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 Cadence Bancorp with a short position of Edenred Malakoff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Bancorp and Edenred Malakoff.

Diversification Opportunities for Cadence Bancorp and Edenred Malakoff

-0.4

Correlation Coefficient

Cadence Bancorp  Edenred Malakoff

Very good diversification

The 3 months correlation between Cadence and Edenred is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Bancorp and Edenred Malakoff ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edenred Malakoff ADR and Cadence Bancorp 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 Cadence Bancorp are associated (or correlated) with Edenred Malakoff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edenred Malakoff ADR has no effect on the direction of Cadence Bancorp i.e., Cadence Bancorp and Edenred Malakoff go up and down completely randomly.

Pair Corralation between Cadence Bancorp and Edenred Malakoff

Given the investment horizon of 90 days Cadence Bancorp is expected to generate 1.25 times more return on investment than Edenred Malakoff. However, Cadence Bancorp is 1.25 times more volatile than Edenred Malakoff ADR. It trades about 0.04 of its potential returns per unit of risk. Edenred Malakoff ADR is currently generating about 0.01 per unit of risk. If you would invest  3,360  in Cadence Bancorp on October 27, 2024 and sell it today you would earn a total of  157.00  from holding Cadence Bancorp or generate 4.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Cadence Bancorp  vs.  Edenred Malakoff ADR

Cadence Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Cadence Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Edenred Malakoff ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edenred Malakoff ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Edenred Malakoff is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cadence Bancorp and Edenred Malakoff

The main advantage of trading using opposite Cadence Bancorp and Edenred Malakoff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Bancorp position performs unexpectedly, Edenred Malakoff 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 Edenred Malakoff will offset losses from the drop in Edenred Malakoff's long position.

The idea behind Cadence Bancorp and Edenred Malakoff ADR 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..