Correlation Between Information Services and Cantaloupe

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

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

Diversification Opportunities for Information Services and Cantaloupe

0.1

Correlation Coefficient

Information Services  Cantaloupe

Average diversification

The 3 months correlation between Information and Cantaloupe is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Group and Cantaloupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantaloupe and Information Services 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 Information Services Group are associated (or correlated) with Cantaloupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantaloupe has no effect on the direction of Information Services i.e., Information Services and Cantaloupe go up and down completely randomly.

Pair Corralation between Information Services and Cantaloupe

Considering the 90-day investment horizon Information Services is expected to generate 1.89 times less return on investment than Cantaloupe. But when comparing it to its historical volatility, Information Services Group is 1.35 times less risky than Cantaloupe. It trades about 0.15 of its potential returns per unit of risk. Cantaloupe is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  653.00  in Cantaloupe on September 4, 2024 and sell it today you would earn a total of  262.00  from holding Cantaloupe or generate 40.12% return on investment over 90 days.

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

Information Services Group  vs.  Cantaloupe

Information Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Information Services demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cantaloupe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cantaloupe are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Cantaloupe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Information Services and Cantaloupe

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

The idea behind Information Services Group and Cantaloupe 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.