Correlation Between ICF International and Thomson Reuters

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Can any of the company-specific risk be diversified away by investing in both ICF International and Thomson Reuters 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 ICF International and Thomson Reuters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICF International and Thomson Reuters Corp, you can compare the effects of market volatilities on ICF International and Thomson Reuters 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 ICF International with a short position of Thomson Reuters. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICF International and Thomson Reuters.

Diversification Opportunities for ICF International and Thomson Reuters

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between ICF and Thomson is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ICF International and Thomson Reuters Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters Corp and ICF International 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 ICF International are associated (or correlated) with Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters Corp has no effect on the direction of ICF International i.e., ICF International and Thomson Reuters go up and down completely randomly.

Pair Corralation between ICF International and Thomson Reuters

Given the investment horizon of 90 days ICF International is expected to generate 2.11 times more return on investment than Thomson Reuters. However, ICF International is 2.11 times more volatile than Thomson Reuters Corp. It trades about 0.0 of its potential returns per unit of risk. Thomson Reuters Corp is currently generating about -0.03 per unit of risk. If you would invest  13,920  in ICF International on August 28, 2024 and sell it today you would lose (368.00) from holding ICF International or give up 2.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ICF International  vs.  Thomson Reuters Corp

 Performance 
       Timeline  
ICF International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ICF International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Thomson Reuters Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Thomson Reuters Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Thomson Reuters is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ICF International and Thomson Reuters Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ICF International and Thomson Reuters

The main advantage of trading using opposite ICF International and Thomson Reuters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICF International position performs unexpectedly, Thomson Reuters 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 Thomson Reuters will offset losses from the drop in Thomson Reuters' long position.
The idea behind ICF International and Thomson Reuters Corp 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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