Correlation Between Cass Information and WOODSIDE ENE

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

Diversification Opportunities for Cass Information and WOODSIDE ENE

-0.6

Correlation Coefficient

Cass Information  WOODSIDE ENE

Excellent diversification

The 3 months correlation between Cass and WOODSIDE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and WOODSIDE ENE SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOODSIDE ENE SPADR 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 WOODSIDE ENE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOODSIDE ENE SPADR has no effect on the direction of Cass Information i.e., Cass Information and WOODSIDE ENE go up and down completely randomly.

Pair Corralation between Cass Information and WOODSIDE ENE

Assuming the 90 days horizon Cass Information Systems is expected to generate 0.81 times more return on investment than WOODSIDE ENE. However, Cass Information Systems is 1.24 times less risky than WOODSIDE ENE. It trades about 0.03 of its potential returns per unit of risk. WOODSIDE ENE SPADR is currently generating about -0.03 per unit of risk. If you would invest  3,448  in Cass Information Systems on October 5, 2024 and sell it today you would earn a total of  472.00  from holding Cass Information Systems or generate 13.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.68%
Values	Daily Returns

Cass Information Systems  vs.  WOODSIDE ENE SPADR

Cass Information Systems

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Cass Information Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

WOODSIDE ENE SPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOODSIDE ENE SPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cass Information and WOODSIDE ENE

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

The idea behind Cass Information Systems and WOODSIDE ENE SPADR 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.