Correlation Between Cadre Holdings and National Presto

Can any of the company-specific risk be diversified away by investing in both Cadre Holdings and National Presto 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 Cadre Holdings and National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cadre Holdings and National Presto Industries, you can compare the effects of market volatilities on Cadre Holdings and National Presto 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 Cadre Holdings with a short position of National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadre Holdings and National Presto.

Diversification Opportunities for Cadre Holdings and National Presto

0.34

Correlation Coefficient

Cadre Holdings  National Presto

Weak diversification

The 3 months correlation between Cadre and National is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cadre Holdings and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu and Cadre Holdings 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 Cadre Holdings are associated (or correlated) with National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of Cadre Holdings i.e., Cadre Holdings and National Presto go up and down completely randomly.

Pair Corralation between Cadre Holdings and National Presto

Given the investment horizon of 90 days Cadre Holdings is expected to generate 1.38 times more return on investment than National Presto. However, Cadre Holdings is 1.38 times more volatile than National Presto Industries. It trades about -0.02 of its potential returns per unit of risk. National Presto Industries is currently generating about -0.08 per unit of risk. If you would invest  3,199  in Cadre Holdings on December 28, 2024 and sell it today you would lose (134.00) from holding Cadre Holdings or give up 4.19% of portfolio value over 90 days.

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

Cadre Holdings  vs.  National Presto Industries

Cadre Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadre Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cadre Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

National Presto Indu

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Presto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Cadre Holdings and National Presto

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

The idea behind Cadre Holdings and National Presto Industries 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.