Correlation Between Parsons Corp and Thoughtworks Holding
Can any of the company-specific risk be diversified away by investing in both Parsons Corp 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 Parsons Corp and Thoughtworks Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parsons Corp and Thoughtworks Holding, you can compare the effects of market volatilities on Parsons Corp 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 Parsons Corp with a short position of Thoughtworks Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parsons Corp and Thoughtworks Holding.
Diversification Opportunities for Parsons Corp and Thoughtworks Holding
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parsons and Thoughtworks is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Parsons Corp and Thoughtworks Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoughtworks Holding and Parsons Corp 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 Parsons Corp 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 Parsons Corp i.e., Parsons Corp and Thoughtworks Holding go up and down completely randomly.
Pair Corralation between Parsons Corp and Thoughtworks Holding
Considering the 90-day investment horizon Parsons Corp is expected to generate 2.1 times less return on investment than Thoughtworks Holding. But when comparing it to its historical volatility, Parsons Corp is 1.46 times less risky than Thoughtworks Holding. It trades about 0.09 of its potential returns per unit of risk. Thoughtworks Holding is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 283.00 in Thoughtworks Holding on August 28, 2024 and sell it today you would earn a total of 164.00 from holding Thoughtworks Holding or generate 57.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.6% |
| Values | Daily Returns |
Parsons Corp vs. Thoughtworks Holding
Performance |
| Timeline |
| Parsons Corp |
| Thoughtworks Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Parsons Corp and Thoughtworks Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parsons Corp and Thoughtworks Holding
The main advantage of trading using opposite Parsons Corp and Thoughtworks Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parsons Corp 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.| Parsons Corp vs. Leidos Holdings | Parsons Corp vs. CACI International | Parsons Corp vs. ASGN Inc | Parsons Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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