Correlation Between Formula Systems and CACI International
Can any of the company-specific risk be diversified away by investing in both Formula Systems and CACI 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 Formula Systems and CACI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formula Systems 1985 and CACI International, you can compare the effects of market volatilities on Formula Systems and CACI 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 Formula Systems with a short position of CACI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formula Systems and CACI International.
Diversification Opportunities for Formula Systems and CACI International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formula and CACI is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Formula Systems 1985 and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International and Formula Systems 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 Formula Systems 1985 are associated (or correlated) with CACI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CACI International has no effect on the direction of Formula Systems i.e., Formula Systems and CACI International go up and down completely randomly.
Pair Corralation between Formula Systems and CACI International
Assuming the 90 days horizon Formula Systems is expected to generate 2.35 times less return on investment than CACI International. In addition to that, Formula Systems is 2.01 times more volatile than CACI International. It trades about 0.01 of its total potential returns per unit of risk. CACI International is currently generating about 0.07 per unit of volatility. If you would invest 31,102 in CACI International on August 27, 2024 and sell it today you would earn a total of 15,776 from holding CACI International or generate 50.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formula Systems 1985 vs. CACI International
Performance |
| Timeline |
| Formula Systems 1985 |
| CACI International |
Formula Systems and CACI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formula Systems and CACI International
The main advantage of trading using opposite Formula Systems and CACI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formula Systems position performs unexpectedly, CACI 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 CACI International will offset losses from the drop in CACI International's long position.| Formula Systems vs. CSP Inc | Formula Systems vs. Nayax | Formula Systems vs. Information Services Group | Formula Systems vs. The Hackett Group |
| CACI International vs. Leidos Holdings | CACI International vs. Parsons Corp | CACI International vs. ASGN Inc | CACI International vs. ExlService 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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