Correlation Between Core Main and Cadre Holdings

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

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

Diversification Opportunities for Core Main and Cadre Holdings

0.14

Correlation Coefficient

Core Main  Cadre Holdings

Average diversification

The 3 months correlation between Core and Cadre is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings and Core Main 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 Core Main are associated (or correlated) with Cadre Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadre Holdings has no effect on the direction of Core Main i.e., Core Main and Cadre Holdings go up and down completely randomly.

Pair Corralation between Core Main and Cadre Holdings

Considering the 90-day investment horizon Core Main is expected to generate 1.24 times more return on investment than Cadre Holdings. However, Core Main is 1.24 times more volatile than Cadre Holdings. It trades about 0.07 of its potential returns per unit of risk. Cadre Holdings is currently generating about 0.03 per unit of risk. If you would invest  3,806  in Core Main on September 4, 2024 and sell it today you would earn a total of  1,772  from holding Core Main or generate 46.56% return on investment over 90 days.

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

Core Main  vs.  Cadre Holdings

Core Main

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Core Main are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Core Main displayed solid returns over the last few months and may actually be approaching a breakup point.

Cadre Holdings

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Core Main and Cadre Holdings

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

The idea behind Core Main and Cadre Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.