Correlation Between Cannae Holdings and 43118DAA8

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Can any of the company-specific risk be diversified away by investing in both Cannae Holdings and 43118DAA8 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 43118DAA8 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannae Holdings and US43118DAA81, you can compare the effects of market volatilities on Cannae Holdings and 43118DAA8 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 43118DAA8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannae Holdings and 43118DAA8.

Diversification Opportunities for Cannae Holdings and 43118DAA8

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Cannae and 43118DAA8 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and US43118DAA81 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US43118DAA81 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 43118DAA8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US43118DAA81 has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and 43118DAA8 go up and down completely randomly.

Pair Corralation between Cannae Holdings and 43118DAA8

Given the investment horizon of 90 days Cannae Holdings is expected to generate 0.25 times more return on investment than 43118DAA8. However, Cannae Holdings is 3.95 times less risky than 43118DAA8. It trades about -0.18 of its potential returns per unit of risk. US43118DAA81 is currently generating about -0.12 per unit of risk. If you would invest  2,003  in Cannae Holdings on October 26, 2024 and sell it today you would lose (81.00) from holding Cannae Holdings or give up 4.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy42.11%
ValuesDaily Returns

Cannae Holdings  vs.  US43118DAA81

 Performance 
       Timeline  
Cannae Holdings 

Risk-Adjusted Performance

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Weak
 
Strong
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 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.
US43118DAA81 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days US43118DAA81 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US43118DAA81 investors.

Cannae Holdings and 43118DAA8 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cannae Holdings and 43118DAA8

The main advantage of trading using opposite Cannae Holdings and 43118DAA8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings position performs unexpectedly, 43118DAA8 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 43118DAA8 will offset losses from the drop in 43118DAA8's long position.
The idea behind Cannae Holdings and US43118DAA81 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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