Correlation Between Cass Information and ViacomCBS

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

Diversification Opportunities for Cass Information and ViacomCBS

-0.05

Correlation Coefficient

Cass Information  ViacomCBS

Good diversification

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

Pair Corralation between Cass Information and ViacomCBS

Assuming the 90 days horizon Cass Information Systems is expected to generate 2.05 times more return on investment than ViacomCBS. However, Cass Information is 2.05 times more volatile than ViacomCBS. It trades about -0.01 of its potential returns per unit of risk. ViacomCBS is currently generating about -0.11 per unit of risk. If you would invest  3,992  in Cass Information Systems on December 21, 2024 and sell it today you would lose (52.00) from holding Cass Information Systems or give up 1.3% of portfolio value over 90 days.

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

Cass Information Systems  vs.  ViacomCBS

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. Despite nearly stable basic indicators, Cass Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ViacomCBS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ViacomCBS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ViacomCBS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cass Information and ViacomCBS

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

The idea behind Cass Information Systems and ViacomCBS 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.