Correlation Between Booz Allen and ICF International
Can any of the company-specific risk be diversified away by investing in both Booz Allen and ICF International 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 Booz Allen and ICF International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booz Allen Hamilton and ICF International, you can compare the effects of market volatilities on Booz Allen and ICF International 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 Booz Allen with a short position of ICF International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and ICF International.
Diversification Opportunities for Booz Allen and ICF International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Booz and ICF is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and ICF International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICF International and Booz Allen 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 Booz Allen Hamilton are associated (or correlated) with ICF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICF International has no effect on the direction of Booz Allen i.e., Booz Allen and ICF International go up and down completely randomly.
Pair Corralation between Booz Allen and ICF International
Considering the 90-day investment horizon Booz Allen Hamilton is expected to generate 1.29 times more return on investment than ICF International. However, Booz Allen is 1.29 times more volatile than ICF International. It trades about -0.22 of its potential returns per unit of risk. ICF International is currently generating about -0.48 per unit of risk. If you would invest 14,080 in Booz Allen Hamilton on October 9, 2024 and sell it today you would lose (1,006) from holding Booz Allen Hamilton or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booz Allen Hamilton vs. ICF International
Performance |
| Timeline |
| Booz Allen Hamilton |
| ICF International |
Booz Allen and ICF International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booz Allen and ICF International
The main advantage of trading using opposite Booz Allen and ICF International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booz Allen position performs unexpectedly, ICF International 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 ICF International will offset losses from the drop in ICF International's long position.| Booz Allen vs. Huron Consulting Group | Booz Allen vs. CRA International | Booz Allen vs. Forrester Research | Booz Allen vs. Exponent |
| ICF International vs. Forrester Research | ICF International vs. Huron Consulting Group | ICF International vs. Franklin Covey | ICF International vs. FTI Consulting |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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