Correlation Between Booz Allen and Verisk Analytics

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

Diversification Opportunities for Booz Allen and Verisk Analytics

-0.4

Correlation Coefficient

Booz Allen  Verisk Analytics

Very good diversification

The 3 months correlation between Booz and Verisk is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics 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 Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of Booz Allen i.e., Booz Allen and Verisk Analytics go up and down completely randomly.

Pair Corralation between Booz Allen and Verisk Analytics

Considering the 90-day investment horizon Booz Allen Hamilton is expected to under-perform the Verisk Analytics. In addition to that, Booz Allen is 2.82 times more volatile than Verisk Analytics. It trades about -0.08 of its total potential returns per unit of risk. Verisk Analytics is currently generating about 0.01 per unit of volatility. If you would invest  27,998  in Verisk Analytics on September 18, 2024 and sell it today you would earn a total of  27.00  from holding Verisk Analytics or generate 0.1% return on investment over 90 days.

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

Booz Allen Hamilton  vs.  Verisk Analytics

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.

Verisk Analytics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Booz Allen and Verisk Analytics

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

The idea behind Booz Allen Hamilton and Verisk Analytics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..