Correlation Between Booz Allen and Resources Connection
Can any of the company-specific risk be diversified away by investing in both Booz Allen and Resources Connection 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 Resources Connection 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 Resources Connection, you can compare the effects of market volatilities on Booz Allen and Resources Connection 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 Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and Resources Connection.
Diversification Opportunities for Booz Allen and Resources Connection
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Booz and Resources is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection 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 Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of Booz Allen i.e., Booz Allen and Resources Connection go up and down completely randomly.
Pair Corralation between Booz Allen and Resources Connection
Considering the 90-day investment horizon Booz Allen Hamilton is expected to under-perform the Resources Connection. But the stock apears to be less risky and, when comparing its historical volatility, Booz Allen Hamilton is 1.26 times less risky than Resources Connection. The stock trades about -0.22 of its potential returns per unit of risk. The Resources Connection is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 857.00 in Resources Connection on October 9, 2024 and sell it today you would earn a total of 30.00 from holding Resources Connection or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booz Allen Hamilton vs. Resources Connection
Performance |
| Timeline |
| Booz Allen Hamilton |
| Resources Connection |
Booz Allen and Resources Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booz Allen and Resources Connection
The main advantage of trading using opposite Booz Allen and Resources Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booz Allen position performs unexpectedly, Resources Connection 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 Resources Connection will offset losses from the drop in Resources Connection's long position.| Booz Allen vs. Huron Consulting Group | Booz Allen vs. CRA International | Booz Allen vs. Forrester Research | Booz Allen vs. Exponent |
| Resources Connection vs. CRA International | Resources Connection vs. Huron Consulting Group | Resources Connection vs. Forrester Research | Resources Connection vs. Exponent |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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