Correlation Between Cass Information and All American

Can any of the company-specific risk be diversified away by investing in both Cass Information and All American 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 All American 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 All American Pet, you can compare the effects of market volatilities on Cass Information and All American 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 All American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and All American.

Diversification Opportunities for Cass Information and All American

0.35

Correlation Coefficient

Cass Information  All American

Weak diversification

The 3 months correlation between Cass and All is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and All American Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Pet 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 All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Pet has no effect on the direction of Cass Information i.e., Cass Information and All American go up and down completely randomly.

Pair Corralation between Cass Information and All American

Given the investment horizon of 90 days Cass Information Systems is expected to under-perform the All American. But the stock apears to be less risky and, when comparing its historical volatility, Cass Information Systems is 28.3 times less risky than All American. The stock trades about 0.0 of its potential returns per unit of risk. The All American Pet is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.03  in All American Pet on October 11, 2024 and sell it today you would lose (0.03) from holding All American Pet or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Cass Information Systems  vs.  All American Pet

Cass Information Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cass Information Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cass Information is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

All American Pet

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in All American Pet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, All American unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Information and All American

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

The idea behind Cass Information Systems and All American Pet 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 Commodity Directory module to find actively traded commodities issued by global exchanges.