Correlation Between SGS SA and Booz Allen
Can any of the company-specific risk be diversified away by investing in both SGS SA and Booz Allen 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 SGS SA and Booz Allen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SGS SA and Booz Allen Hamilton, you can compare the effects of market volatilities on SGS SA and Booz Allen 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 SGS SA with a short position of Booz Allen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGS SA and Booz Allen.
Diversification Opportunities for SGS SA and Booz Allen
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SGS and Booz is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton and SGS SA 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 SGS SA are associated (or correlated) with Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of SGS SA i.e., SGS SA and Booz Allen go up and down completely randomly.
Pair Corralation between SGS SA and Booz Allen
Assuming the 90 days horizon SGS SA is expected to generate 0.45 times more return on investment than Booz Allen. However, SGS SA is 2.23 times less risky than Booz Allen. It trades about -0.32 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.28 per unit of risk. If you would invest 1,070 in SGS SA on August 27, 2024 and sell it today you would lose (107.00) from holding SGS SA or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SGS SA vs. Booz Allen Hamilton
Performance |
| Timeline |
| SGS SA |
| Booz Allen Hamilton |
SGS SA and Booz Allen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SGS SA and Booz Allen
The main advantage of trading using opposite SGS SA and Booz Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGS SA position performs unexpectedly, Booz Allen 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 Booz Allen will offset losses from the drop in Booz Allen's long position.| SGS SA vs. Sack Lunch Productions | SGS SA vs. Potash America | SGS SA vs. Dalrada Financial Corp | SGS SA vs. TransUnion |
| Booz Allen vs. Huron Consulting Group | Booz Allen vs. CRA International | Booz Allen vs. Forrester Research | Booz Allen vs. Exponent |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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