Correlation Between Cass Information and PREMIER FOODS

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

Diversification Opportunities for Cass Information and PREMIER FOODS

0.46

Correlation Coefficient

Cass Information  PREMIER FOODS

Very weak diversification

The 3 months correlation between Cass and PREMIER is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Cass Information i.e., Cass Information and PREMIER FOODS go up and down completely randomly.

Pair Corralation between Cass Information and PREMIER FOODS

Assuming the 90 days horizon Cass Information Systems is expected to under-perform the PREMIER FOODS. But the stock apears to be less risky and, when comparing its historical volatility, Cass Information Systems is 1.03 times less risky than PREMIER FOODS. The stock trades about -0.11 of its potential returns per unit of risk. The PREMIER FOODS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  228.00  in PREMIER FOODS on October 9, 2024 and sell it today you would lose (4.00) from holding PREMIER FOODS or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.37%
Values	Daily Returns

Cass Information Systems  vs.  PREMIER FOODS

Cass Information Systems

Risk-Adjusted Performance

5 of 100

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 fragile basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PREMIER FOODS

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Cass Information and PREMIER FOODS

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

The idea behind Cass Information Systems and PREMIER FOODS 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.