Correlation Between Cass Information and Network 1

Can any of the company-specific risk be diversified away by investing in both Cass Information and Network 1 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 Network 1 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 Network 1 Technologies, you can compare the effects of market volatilities on Cass Information and Network 1 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 Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Network 1.

Diversification Opportunities for Cass Information and Network 1

-0.05

Correlation Coefficient

Cass Information  Network 1

Good diversification

The 3 months correlation between Cass and Network is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies 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 Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Cass Information i.e., Cass Information and Network 1 go up and down completely randomly.

Pair Corralation between Cass Information and Network 1

Given the investment horizon of 90 days Cass Information Systems is expected to generate 0.8 times more return on investment than Network 1. However, Cass Information Systems is 1.25 times less risky than Network 1. It trades about 0.06 of its potential returns per unit of risk. Network 1 Technologies is currently generating about 0.04 per unit of risk. If you would invest  4,035  in Cass Information Systems on December 28, 2024 and sell it today you would earn a total of  213.00  from holding Cass Information Systems or generate 5.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cass Information Systems  vs.  Network 1 Technologies

Cass Information Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Network 1 Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Network 1 Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Network 1 is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cass Information and Network 1

The main advantage of trading using opposite Cass Information and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind Cass Information Systems and Network 1 Technologies 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.