Correlation Between Cass Saddle and FIRST MUTUAL

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

By analyzing existing cross correlation between Cass Saddle Agriculture and FIRST MUTUAL PROPERTIES, you can compare the effects of market volatilities on Cass Saddle and FIRST MUTUAL 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 Saddle with a short position of FIRST MUTUAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Saddle and FIRST MUTUAL.

Diversification Opportunities for Cass Saddle and FIRST MUTUAL

0.46

Correlation Coefficient

Cass Saddle  FIRST MUTUAL

Very weak diversification

The 3 months correlation between Cass and FIRST is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cass Saddle Agriculture and FIRST MUTUAL PROPERTIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST MUTUAL PROPERTIES and Cass Saddle 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 Saddle Agriculture are associated (or correlated) with FIRST MUTUAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST MUTUAL PROPERTIES has no effect on the direction of Cass Saddle i.e., Cass Saddle and FIRST MUTUAL go up and down completely randomly.

Pair Corralation between Cass Saddle and FIRST MUTUAL

Assuming the 90 days trading horizon Cass Saddle is expected to generate 2.23 times less return on investment than FIRST MUTUAL. But when comparing it to its historical volatility, Cass Saddle Agriculture is 1.35 times less risky than FIRST MUTUAL. It trades about 0.2 of its potential returns per unit of risk. FIRST MUTUAL PROPERTIES is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  3,060  in FIRST MUTUAL PROPERTIES on August 31, 2024 and sell it today you would earn a total of  6,440  from holding FIRST MUTUAL PROPERTIES or generate 210.46% return on investment over 90 days.

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

Cass Saddle Agriculture  vs.  FIRST MUTUAL PROPERTIES

Cass Saddle Agriculture

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Saddle Agriculture are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cass Saddle showed solid returns over the last few months and may actually be approaching a breakup point.

FIRST MUTUAL PROPERTIES

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST MUTUAL PROPERTIES are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, FIRST MUTUAL demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Saddle and FIRST MUTUAL

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

The idea behind Cass Saddle Agriculture and FIRST MUTUAL PROPERTIES 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.