Correlation Between Leidos Holdings and Thoughtworks Holding
Can any of the company-specific risk be diversified away by investing in both Leidos Holdings and Thoughtworks Holding 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 Leidos Holdings and Thoughtworks Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leidos Holdings and Thoughtworks Holding, you can compare the effects of market volatilities on Leidos Holdings and Thoughtworks Holding 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 Leidos Holdings with a short position of Thoughtworks Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leidos Holdings and Thoughtworks Holding.
Diversification Opportunities for Leidos Holdings and Thoughtworks Holding
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leidos and Thoughtworks is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and Thoughtworks Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoughtworks Holding and Leidos 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 Leidos Holdings are associated (or correlated) with Thoughtworks Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thoughtworks Holding has no effect on the direction of Leidos Holdings i.e., Leidos Holdings and Thoughtworks Holding go up and down completely randomly.
Pair Corralation between Leidos Holdings and Thoughtworks Holding
Given the investment horizon of 90 days Leidos Holdings is expected to generate 0.39 times more return on investment than Thoughtworks Holding. However, Leidos Holdings is 2.55 times less risky than Thoughtworks Holding. It trades about 0.12 of its potential returns per unit of risk. Thoughtworks Holding is currently generating about 0.03 per unit of risk. If you would invest 10,512 in Leidos Holdings on August 24, 2024 and sell it today you would earn a total of 5,957 from holding Leidos Holdings or generate 56.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.2% |
| Values | Daily Returns |
Leidos Holdings vs. Thoughtworks Holding
Performance |
| Timeline |
| Leidos Holdings |
| Thoughtworks Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Leidos Holdings and Thoughtworks Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leidos Holdings and Thoughtworks Holding
The main advantage of trading using opposite Leidos Holdings and Thoughtworks Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leidos Holdings position performs unexpectedly, Thoughtworks Holding 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 Thoughtworks Holding will offset losses from the drop in Thoughtworks Holding's long position.| Leidos Holdings vs. CACI International | Leidos Holdings vs. Parsons Corp | Leidos Holdings vs. ASGN Inc | Leidos Holdings vs. ExlService Holdings |
| Thoughtworks Holding vs. ExlService Holdings | Thoughtworks Holding vs. Genpact Limited | Thoughtworks Holding vs. ASGN Inc | Thoughtworks Holding vs. TTEC 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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