Correlation Between Cass Information and Civeo Corp

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

Diversification Opportunities for Cass Information and Civeo Corp

0.27

Correlation Coefficient

Cass Information  Civeo Corp

Modest diversification

The 3 months correlation between Cass and Civeo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Civeo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civeo Corp 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 Civeo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civeo Corp has no effect on the direction of Cass Information i.e., Cass Information and Civeo Corp go up and down completely randomly.

Pair Corralation between Cass Information and Civeo Corp

Given the investment horizon of 90 days Cass Information Systems is expected to under-perform the Civeo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Cass Information Systems is 1.12 times less risky than Civeo Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Civeo Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,317  in Civeo Corp on November 28, 2024 and sell it today you would earn a total of  379.00  from holding Civeo Corp or generate 16.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cass Information Systems  vs.  Civeo Corp

Cass Information Systems

Risk-Adjusted Performance

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.

Civeo Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Civeo Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Civeo Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Information and Civeo Corp

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

The idea behind Cass Information Systems and Civeo Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.