Correlation Between Cass Information and CHIBA BANK

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

Diversification Opportunities for Cass Information and CHIBA BANK

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Cass and CHIBA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and CHIBA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIBA BANK 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 CHIBA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIBA BANK has no effect on the direction of Cass Information i.e., Cass Information and CHIBA BANK go up and down completely randomly.

Pair Corralation between Cass Information and CHIBA BANK

Assuming the 90 days horizon Cass Information Systems is expected to under-perform the CHIBA BANK. In addition to that, Cass Information is 1.05 times more volatile than CHIBA BANK. It trades about -0.34 of its total potential returns per unit of risk. CHIBA BANK is currently generating about -0.35 per unit of volatility. If you would invest  805.00  in CHIBA BANK on October 6, 2024 and sell it today you would lose (60.00) from holding CHIBA BANK or give up 7.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Cass Information Systems  vs.  CHIBA BANK

 Performance 
       Timeline  
Cass Information Systems 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.
CHIBA BANK 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in CHIBA BANK are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CHIBA BANK is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cass Information and CHIBA BANK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cass Information and CHIBA BANK

The main advantage of trading using opposite Cass Information and CHIBA BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, CHIBA BANK 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 CHIBA BANK will offset losses from the drop in CHIBA BANK's long position.
The idea behind Cass Information Systems and CHIBA BANK 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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