Correlation Between Booz Allen and TransUnion

Can any of the company-specific risk be diversified away by investing in both Booz Allen and TransUnion 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 TransUnion 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 TransUnion, you can compare the effects of market volatilities on Booz Allen and TransUnion 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 TransUnion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and TransUnion.

Diversification Opportunities for Booz Allen and TransUnion

0.45

Correlation Coefficient

Booz Allen  TransUnion

Very weak diversification

The 3 months correlation between Booz and TransUnion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and TransUnion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransUnion 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 TransUnion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransUnion has no effect on the direction of Booz Allen i.e., Booz Allen and TransUnion go up and down completely randomly.

Pair Corralation between Booz Allen and TransUnion

Considering the 90-day investment horizon Booz Allen Hamilton is expected to under-perform the TransUnion. In addition to that, Booz Allen is 1.29 times more volatile than TransUnion. It trades about -0.09 of its total potential returns per unit of risk. TransUnion is currently generating about 0.11 per unit of volatility. If you would invest  9,683  in TransUnion on September 18, 2024 and sell it today you would earn a total of  353.00  from holding TransUnion or generate 3.65% return on investment over 90 days.

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

Booz Allen Hamilton  vs.  TransUnion

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

TransUnion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransUnion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TransUnion is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Booz Allen and TransUnion

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

The idea behind Booz Allen Hamilton and TransUnion 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.