Correlation Between Digimarc and Hackett
Can any of the company-specific risk be diversified away by investing in both Digimarc and Hackett 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 Digimarc and Hackett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and The Hackett Group, you can compare the effects of market volatilities on Digimarc and Hackett 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 Digimarc with a short position of Hackett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Hackett.
Diversification Opportunities for Digimarc and Hackett
Poor diversification
The 3 months correlation between Digimarc and Hackett is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and The Hackett Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hackett Group and Digimarc 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 Digimarc are associated (or correlated) with Hackett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hackett Group has no effect on the direction of Digimarc i.e., Digimarc and Hackett go up and down completely randomly.
Pair Corralation between Digimarc and Hackett
Given the investment horizon of 90 days Digimarc is expected to generate 1.13 times less return on investment than Hackett. In addition to that, Digimarc is 1.13 times more volatile than The Hackett Group. It trades about 0.14 of its total potential returns per unit of risk. The Hackett Group is currently generating about 0.18 per unit of volatility. If you would invest 2,576 in The Hackett Group on September 13, 2024 and sell it today you would earn a total of 632.00 from holding The Hackett Group or generate 24.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digimarc vs. The Hackett Group
Performance |
| Timeline |
| Digimarc |
| Hackett Group |
Digimarc and Hackett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and Hackett
The main advantage of trading using opposite Digimarc and Hackett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc position performs unexpectedly, Hackett 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 Hackett will offset losses from the drop in Hackett's long position.The idea behind Digimarc and The Hackett Group 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.| Hackett vs. EPAM Systems | Hackett vs. Infosys Ltd ADR | Hackett vs. Cognizant Technology Solutions | Hackett vs. FiscalNote Holdings |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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