Correlation Between Genpact and CBIZ

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

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

Diversification Opportunities for Genpact and CBIZ

0.91

Correlation Coefficient

Genpact  CBIZ

Almost no diversification

The 3 months correlation between Genpact and CBIZ is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc and Genpact 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 Genpact Limited are associated (or correlated) with CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of Genpact i.e., Genpact and CBIZ go up and down completely randomly.

Pair Corralation between Genpact and CBIZ

Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the CBIZ. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 1.79 times less risky than CBIZ. The stock trades about -0.43 of its potential returns per unit of risk. The CBIZ Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,201  in CBIZ Inc on September 25, 2024 and sell it today you would earn a total of  28.00  from holding CBIZ Inc or generate 0.34% return on investment over 90 days.

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

Genpact Limited  vs.  CBIZ Inc

Genpact Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CBIZ Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CBIZ Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, CBIZ showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and CBIZ

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

The idea behind Genpact Limited and CBIZ Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.