Correlation Between Cass Information and Civeo Corp

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

By analyzing existing cross correlation between Cass Information Systems and Civeo Corp, you can compare the effects of market volatilities on Cass Information and Civeo Corp 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 Cass Information with a short position of Civeo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Civeo Corp.

Diversification Opportunities for Cass Information and Civeo Corp

-0.59

Correlation Coefficient

Cass Information  Civeo Corp

Excellent diversification

The 3 months correlation between Cass and Civeo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Civeo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civeo Corp and Cass Information 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 Cass Information Systems are associated (or correlated) with Civeo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civeo Corp has no effect on the direction of Cass Information i.e., Cass Information and Civeo Corp go up and down completely randomly.

Pair Corralation between Cass Information and Civeo Corp

Given the investment horizon of 90 days Cass Information Systems is expected to generate 0.96 times more return on investment than Civeo Corp. However, Cass Information Systems is 1.05 times less risky than Civeo Corp. It trades about 0.06 of its potential returns per unit of risk. Civeo Corp is currently generating about -0.08 per unit of risk. If you would invest  4,224  in Cass Information Systems on August 27, 2024 and sell it today you would earn a total of  272.00  from holding Cass Information Systems or generate 6.44% return on investment over 90 days.

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

Cass Information Systems  vs.  Civeo Corp

Cass Information Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Civeo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civeo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cass Information and Civeo Corp

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

The idea behind Cass Information Systems and Civeo Corp 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.