Correlation Between DLH Holdings and Exponent
Can any of the company-specific risk be diversified away by investing in both DLH Holdings and Exponent 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 DLH Holdings and Exponent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DLH Holdings Corp and Exponent, you can compare the effects of market volatilities on DLH Holdings and Exponent 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 DLH Holdings with a short position of Exponent. Check out your portfolio center. Please also check ongoing floating volatility patterns of DLH Holdings and Exponent.
Diversification Opportunities for DLH Holdings and Exponent
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DLH and Exponent is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and DLH Holdings 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 DLH Holdings Corp are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of DLH Holdings i.e., DLH Holdings and Exponent go up and down completely randomly.
Pair Corralation between DLH Holdings and Exponent
Given the investment horizon of 90 days DLH Holdings Corp is expected to under-perform the Exponent. In addition to that, DLH Holdings is 1.31 times more volatile than Exponent. It trades about -0.03 of its total potential returns per unit of risk. Exponent is currently generating about 0.0 per unit of volatility. If you would invest 10,304 in Exponent on November 1, 2024 and sell it today you would lose (1,124) from holding Exponent or give up 10.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DLH Holdings Corp vs. Exponent
Performance |
| Timeline |
| DLH Holdings Corp |
| Exponent |
DLH Holdings and Exponent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DLH Holdings and Exponent
The main advantage of trading using opposite DLH Holdings and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DLH Holdings position performs unexpectedly, Exponent 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 Exponent will offset losses from the drop in Exponent's long position.| DLH Holdings vs. Kelly Services A | DLH Holdings vs. Mastech Holdings | DLH Holdings vs. Kforce Inc | DLH Holdings vs. Hudson Global |
| Exponent vs. CRA International | Exponent vs. Huron Consulting Group | Exponent vs. Forrester Research | Exponent vs. Resources Connection |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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