Correlation Between Innovative Solutions and Cadre Holdings

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

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

Diversification Opportunities for Innovative Solutions and Cadre Holdings

-0.51

Correlation Coefficient

Innovative Solutions  Cadre Holdings

Excellent diversification

The 3 months correlation between Innovative and Cadre is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings and Innovative Solutions 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 Innovative Solutions and 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 Innovative Solutions i.e., Innovative Solutions and Cadre Holdings go up and down completely randomly.

Pair Corralation between Innovative Solutions and Cadre Holdings

Given the investment horizon of 90 days Innovative Solutions and is expected to generate 0.85 times more return on investment than Cadre Holdings. However, Innovative Solutions and is 1.18 times less risky than Cadre Holdings. It trades about 0.11 of its potential returns per unit of risk. Cadre Holdings is currently generating about 0.0 per unit of risk. If you would invest  701.00  in Innovative Solutions and on September 3, 2024 and sell it today you would earn a total of  89.00  from holding Innovative Solutions and or generate 12.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Innovative Solutions and  vs.  Cadre Holdings

Innovative Solutions and

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Solutions and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Innovative Solutions exhibited 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 Innovative Solutions and Cadre Holdings

The main advantage of trading using opposite Innovative Solutions and Cadre Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Solutions 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 Innovative Solutions and 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.