Correlation Between Booz Allen and NFT

Can any of the company-specific risk be diversified away by investing in both Booz Allen and NFT 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 Booz Allen and NFT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Booz Allen Hamilton and NFT Limited, you can compare the effects of market volatilities on Booz Allen and NFT 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 Booz Allen with a short position of NFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and NFT.

Diversification Opportunities for Booz Allen and NFT

0.64

Correlation Coefficient

Booz Allen  NFT

Poor diversification

The 3 months correlation between Booz and NFT is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and NFT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFT Limited and Booz Allen 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 Booz Allen Hamilton are associated (or correlated) with NFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFT Limited has no effect on the direction of Booz Allen i.e., Booz Allen and NFT go up and down completely randomly.

Pair Corralation between Booz Allen and NFT

Considering the 90-day investment horizon Booz Allen Hamilton is expected to under-perform the NFT. But the stock apears to be less risky and, when comparing its historical volatility, Booz Allen Hamilton is 4.98 times less risky than NFT. The stock trades about -0.02 of its potential returns per unit of risk. The NFT Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  369.00  in NFT Limited on September 3, 2024 and sell it today you would earn a total of  55.00  from holding NFT Limited or generate 14.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Booz Allen Hamilton  vs.  NFT Limited

Booz Allen Hamilton

Risk-Adjusted Performance

0 of 100

Very Weak

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

NFT Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NFT Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, NFT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Booz Allen and NFT

The main advantage of trading using opposite Booz Allen and NFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booz Allen position performs unexpectedly, NFT 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 NFT will offset losses from the drop in NFT's long position.

The idea behind Booz Allen Hamilton and NFT Limited 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.