Correlation Between Cannae Holdings and BLACK

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

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

Diversification Opportunities for Cannae Holdings and BLACK

-0.37

Correlation Coefficient

Cannae Holdings  BLACK

Very good diversification

The 3 months correlation between Cannae and BLACK is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and BLACK HILLS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACK HILLS P 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 BLACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACK HILLS P has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and BLACK go up and down completely randomly.

Pair Corralation between Cannae Holdings and BLACK

Given the investment horizon of 90 days Cannae Holdings is expected to under-perform the BLACK. In addition to that, Cannae Holdings is 1.26 times more volatile than BLACK HILLS P. It trades about -0.2 of its total potential returns per unit of risk. BLACK HILLS P is currently generating about -0.17 per unit of volatility. If you would invest  9,668  in BLACK HILLS P on September 23, 2024 and sell it today you would lose (286.00) from holding BLACK HILLS P or give up 2.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Cannae Holdings  vs.  BLACK HILLS P

Cannae Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cannae Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BLACK HILLS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLACK HILLS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLACK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cannae Holdings and BLACK

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

The idea behind Cannae Holdings and BLACK HILLS P 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.