Correlation Between Cass Information and Fortuna Silver

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

Diversification Opportunities for Cass Information and Fortuna Silver

0.46

Correlation Coefficient

Cass Information  Fortuna Silver

Very weak diversification

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

Pair Corralation between Cass Information and Fortuna Silver

Assuming the 90 days horizon Cass Information Systems is expected to generate 0.41 times more return on investment than Fortuna Silver. However, Cass Information Systems is 2.47 times less risky than Fortuna Silver. It trades about 0.0 of its potential returns per unit of risk. Fortuna Silver Mines is currently generating about -0.03 per unit of risk. If you would invest  4,150  in Cass Information Systems on September 12, 2024 and sell it today you would lose (10.00) from holding Cass Information Systems or give up 0.24% of portfolio value over 90 days.

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

Cass Information Systems  vs.  Fortuna Silver Mines

Cass Information Systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cass Information reported solid returns over the last few months and may actually be approaching a breakup point.

Fortuna Silver Mines

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortuna Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Information and Fortuna Silver

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

The idea behind Cass Information Systems and Fortuna Silver Mines 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.