Correlation Between Cass Information and POWER METALS

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

Diversification Opportunities for Cass Information and POWER METALS

-0.23

Correlation Coefficient

Cass Information  POWER METALS

Very good diversification

The 3 months correlation between Cass and POWER is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and POWER METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWER METALS 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 POWER METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWER METALS has no effect on the direction of Cass Information i.e., Cass Information and POWER METALS go up and down completely randomly.

Pair Corralation between Cass Information and POWER METALS

Assuming the 90 days horizon Cass Information is expected to generate 2.61 times less return on investment than POWER METALS. But when comparing it to its historical volatility, Cass Information Systems is 2.69 times less risky than POWER METALS. It trades about 0.03 of its potential returns per unit of risk. POWER METALS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  28.00  in POWER METALS on October 22, 2024 and sell it today you would earn a total of  1.00  from holding POWER METALS or generate 3.57% 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.  POWER METALS

Cass Information Systems

Risk-Adjusted Performance

4 of 100

Insignificant

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

POWER METALS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in POWER METALS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, POWER METALS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cass Information and POWER METALS

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

The idea behind Cass Information Systems and POWER METALS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.