Correlation Between Cadence Bancorp and Idemitsu Kosan
Can any of the company-specific risk be diversified away by investing in both Cadence Bancorp and Idemitsu Kosan 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 Idemitsu Kosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadence Bancorp and Idemitsu Kosan CoLtd, you can compare the effects of market volatilities on Cadence Bancorp and Idemitsu Kosan 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 Idemitsu Kosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Bancorp and Idemitsu Kosan.
Diversification Opportunities for Cadence Bancorp and Idemitsu Kosan
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cadence and Idemitsu is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Bancorp and Idemitsu Kosan CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan CoLtd 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 Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan CoLtd has no effect on the direction of Cadence Bancorp i.e., Cadence Bancorp and Idemitsu Kosan go up and down completely randomly.
Pair Corralation between Cadence Bancorp and Idemitsu Kosan
Given the investment horizon of 90 days Cadence Bancorp is expected to generate 1.32 times more return on investment than Idemitsu Kosan. However, Cadence Bancorp is 1.32 times more volatile than Idemitsu Kosan CoLtd. It trades about 0.04 of its potential returns per unit of risk. Idemitsu Kosan CoLtd is currently generating about 0.05 per unit of risk. If you would invest 2,562 in Cadence Bancorp on October 26, 2024 and sell it today you would earn a total of 955.00 from holding Cadence Bancorp or generate 37.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.2% |
Values | Daily Returns |
Cadence Bancorp vs. Idemitsu Kosan CoLtd
Performance |
Timeline |
Cadence Bancorp |
Idemitsu Kosan CoLtd |
Cadence Bancorp and Idemitsu Kosan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cadence Bancorp and Idemitsu Kosan
The main advantage of trading using opposite Cadence Bancorp and Idemitsu Kosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Bancorp position performs unexpectedly, Idemitsu Kosan 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 Idemitsu Kosan will offset losses from the drop in Idemitsu Kosan's long position.Cadence Bancorp vs. NBT Bancorp | Cadence Bancorp vs. Financial Institutions | Cadence Bancorp vs. Berkshire Hills Bancorp | Cadence Bancorp vs. Fidelity DD Bancorp |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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