Correlation Between Jack Henry and Science Applications
Can any of the company-specific risk be diversified away by investing in both Jack Henry and Science Applications 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 Jack Henry and Science Applications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jack Henry Associates and Science Applications International, you can compare the effects of market volatilities on Jack Henry and Science Applications 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 Jack Henry with a short position of Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack Henry and Science Applications.
Diversification Opportunities for Jack Henry and Science Applications
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jack and Science is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jack Henry Associates and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and Jack Henry 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 Jack Henry Associates are associated (or correlated) with Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Jack Henry i.e., Jack Henry and Science Applications go up and down completely randomly.
Pair Corralation between Jack Henry and Science Applications
Given the investment horizon of 90 days Jack Henry Associates is expected to generate 0.39 times more return on investment than Science Applications. However, Jack Henry Associates is 2.56 times less risky than Science Applications. It trades about -0.03 of its potential returns per unit of risk. Science Applications International is currently generating about -0.15 per unit of risk. If you would invest 17,899 in Jack Henry Associates on November 1, 2024 and sell it today you would lose (384.00) from holding Jack Henry Associates or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jack Henry Associates vs. Science Applications Internati
Performance |
| Timeline |
| Jack Henry Associates |
| Science Applications |
Jack Henry and Science Applications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jack Henry and Science Applications
The main advantage of trading using opposite Jack Henry and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack Henry position performs unexpectedly, Science Applications 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 Science Applications will offset losses from the drop in Science Applications' long position.| Jack Henry vs. CACI International | Jack Henry vs. CDW Corp | Jack Henry vs. Broadridge Financial Solutions | Jack Henry vs. ExlService Holdings |
| Science Applications vs. CACI International | Science Applications vs. CDW Corp | Science Applications vs. Gartner | Science Applications vs. Jack Henry Associates |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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