Correlation Between Forrester Research and Equifax

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

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

Diversification Opportunities for Forrester Research and Equifax

0.6

Correlation Coefficient

Forrester Research  Equifax

Poor diversification

The 3 months correlation between Forrester and Equifax is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Forrester Research and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and Forrester Research 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 Forrester Research are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of Forrester Research i.e., Forrester Research and Equifax go up and down completely randomly.

Pair Corralation between Forrester Research and Equifax

Given the investment horizon of 90 days Forrester Research is expected to generate 1.48 times more return on investment than Equifax. However, Forrester Research is 1.48 times more volatile than Equifax. It trades about -0.02 of its potential returns per unit of risk. Equifax is currently generating about -0.15 per unit of risk. If you would invest  1,802  in Forrester Research on September 4, 2024 and sell it today you would lose (71.00) from holding Forrester Research or give up 3.94% of portfolio value over 90 days.

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

Forrester Research  vs.  Equifax

Forrester Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forrester Research has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Forrester Research is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Forrester Research and Equifax

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

The idea behind Forrester Research and Equifax 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 Global Correlations module to find global opportunities by holding instruments from different markets.