Correlation Between Where Food and CTS

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

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

Diversification Opportunities for Where Food and CTS

0.61

Correlation Coefficient

Where Food  CTS

Poor diversification

The 3 months correlation between Where and CTS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Where Food 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 Where Food Comes are associated (or correlated) with CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of Where Food i.e., Where Food and CTS go up and down completely randomly.

Pair Corralation between Where Food and CTS

Given the investment horizon of 90 days Where Food is expected to generate 10.67 times less return on investment than CTS. In addition to that, Where Food is 1.09 times more volatile than CTS Corporation. It trades about 0.0 of its total potential returns per unit of risk. CTS Corporation is currently generating about 0.04 per unit of volatility. If you would invest  3,987  in CTS Corporation on September 21, 2024 and sell it today you would earn a total of  1,296  from holding CTS Corporation or generate 32.51% return on investment over 90 days.

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

Where Food Comes  vs.  CTS Corp.

Where Food Comes

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Where Food Comes are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Where Food reported solid returns over the last few months and may actually be approaching a breakup point.

CTS Corporation

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, CTS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Where Food and CTS

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

The idea behind Where Food Comes and CTS Corporation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.