Correlation Between Cass Information and Public Storage

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

Diversification Opportunities for Cass Information and Public Storage

0.08

Correlation Coefficient

Cass Information  Public Storage

Significant diversification

The 3 months correlation between Cass and Public is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage 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 Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Cass Information i.e., Cass Information and Public Storage go up and down completely randomly.

Pair Corralation between Cass Information and Public Storage

Assuming the 90 days horizon Cass Information Systems is expected to generate 1.26 times more return on investment than Public Storage. However, Cass Information is 1.26 times more volatile than Public Storage. It trades about 0.11 of its potential returns per unit of risk. Public Storage is currently generating about -0.02 per unit of risk. If you would invest  3,673  in Cass Information Systems on September 12, 2024 and sell it today you would earn a total of  467.00  from holding Cass Information Systems or generate 12.71% return on investment over 90 days.

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

Cass Information Systems  vs.  Public Storage

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.

Public Storage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cass Information and Public Storage

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

The idea behind Cass Information Systems and Public Storage 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.