Correlation Between Cannae Holdings and Dayforce

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

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

Diversification Opportunities for Cannae Holdings and Dayforce

0.89

Correlation Coefficient

Cannae Holdings  Dayforce

Very poor diversification

The 3 months correlation between Cannae and Dayforce is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and Dayforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dayforce and Cannae 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 Cannae Holdings are associated (or correlated) with Dayforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dayforce has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and Dayforce go up and down completely randomly.

Pair Corralation between Cannae Holdings and Dayforce

Given the investment horizon of 90 days Cannae Holdings is expected to generate 1.0 times more return on investment than Dayforce. However, Cannae Holdings is 1.0 times less risky than Dayforce. It trades about -0.19 of its potential returns per unit of risk. Dayforce is currently generating about -0.26 per unit of risk. If you would invest  2,003  in Cannae Holdings on October 26, 2024 and sell it today you would lose (85.00) from holding Cannae Holdings or give up 4.24% of portfolio value over 90 days.

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

Cannae Holdings  vs.  Dayforce

Cannae Holdings

Risk-Adjusted Performance

0 of 100

Weak

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

Dayforce

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dayforce are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Dayforce may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cannae Holdings and Dayforce

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

The idea behind Cannae Holdings and Dayforce 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.