Correlation Between CRA International and Public Company

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

By analyzing existing cross correlation between CRA International and Public Company Management, you can compare the effects of market volatilities on CRA International and Public Company 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 CRA International with a short position of Public Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRA International and Public Company.

Diversification Opportunities for CRA International and Public Company

0.63

Correlation Coefficient

CRA International  Public Company

Poor diversification

The 3 months correlation between CRA and Public is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and Public Company Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Management and CRA International 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 CRA International are associated (or correlated) with Public Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Management has no effect on the direction of CRA International i.e., CRA International and Public Company go up and down completely randomly.

Pair Corralation between CRA International and Public Company

Given the investment horizon of 90 days CRA International is expected to generate 14.47 times less return on investment than Public Company. But when comparing it to its historical volatility, CRA International is 7.48 times less risky than Public Company. It trades about 0.08 of its potential returns per unit of risk. Public Company Management is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Public Company Management on September 25, 2024 and sell it today you would earn a total of  25.00  from holding Public Company Management or generate 178.57% return on investment over 90 days.

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

CRA International  vs.  Public Company Management

CRA International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Public Management

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Public Company Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Public Company exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CRA International and Public Company

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

The idea behind CRA International and Public Company Management 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.