Correlation Between Cannae Holdings and 025816DB2

Can any of the company-specific risk be diversified away by investing in both Cannae Holdings and 025816DB2 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 025816DB2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cannae Holdings and AXP 585 05 NOV 27, you can compare the effects of market volatilities on Cannae Holdings and 025816DB2 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 025816DB2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannae Holdings and 025816DB2.

Diversification Opportunities for Cannae Holdings and 025816DB2

0.59

Correlation Coefficient

Cannae Holdings  025816DB2

Very weak diversification

The 3 months correlation between Cannae and 025816DB2 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and AXP 585 05 NOV 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXP 585 05 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 025816DB2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXP 585 05 has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and 025816DB2 go up and down completely randomly.

Pair Corralation between Cannae Holdings and 025816DB2

Given the investment horizon of 90 days Cannae Holdings is expected to under-perform the 025816DB2. In addition to that, Cannae Holdings is 4.32 times more volatile than AXP 585 05 NOV 27. It trades about -0.11 of its total potential returns per unit of risk. AXP 585 05 NOV 27 is currently generating about -0.12 per unit of volatility. If you would invest  10,372  in AXP 585 05 NOV 27 on December 4, 2024 and sell it today you would lose (246.00) from holding AXP 585 05 NOV 27 or give up 2.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Cannae Holdings  vs.  AXP 585 05 NOV 27

Cannae Holdings

Risk-Adjusted Performance

Very 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 latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AXP 585 05

Risk-Adjusted Performance

Very Weak

Over the last 90 days AXP 585 05 NOV 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 025816DB2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cannae Holdings and 025816DB2

The main advantage of trading using opposite Cannae Holdings and 025816DB2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings position performs unexpectedly, 025816DB2 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 025816DB2 will offset losses from the drop in 025816DB2's long position.

The idea behind Cannae Holdings and AXP 585 05 NOV 27 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.