Correlation Between Kforce and DLH Holdings
Can any of the company-specific risk be diversified away by investing in both Kforce and DLH Holdings 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 Kforce and DLH Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kforce Inc and DLH Holdings Corp, you can compare the effects of market volatilities on Kforce and DLH Holdings 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 Kforce with a short position of DLH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kforce and DLH Holdings.
Diversification Opportunities for Kforce and DLH Holdings
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kforce and DLH is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp and Kforce 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 Kforce Inc are associated (or correlated) with DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of Kforce i.e., Kforce and DLH Holdings go up and down completely randomly.
Pair Corralation between Kforce and DLH Holdings
Given the investment horizon of 90 days Kforce Inc is expected to generate 0.53 times more return on investment than DLH Holdings. However, Kforce Inc is 1.89 times less risky than DLH Holdings. It trades about -0.19 of its potential returns per unit of risk. DLH Holdings Corp is currently generating about -0.24 per unit of risk. If you would invest 5,968 in Kforce Inc on September 26, 2024 and sell it today you would lose (306.00) from holding Kforce Inc or give up 5.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kforce Inc vs. DLH Holdings Corp
Performance |
Timeline |
Kforce Inc |
DLH Holdings Corp |
Kforce and DLH Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kforce and DLH Holdings
The main advantage of trading using opposite Kforce and DLH Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kforce position performs unexpectedly, DLH Holdings 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 DLH Holdings will offset losses from the drop in DLH Holdings' long position.The idea behind Kforce Inc and DLH Holdings Corp 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.DLH Holdings vs. Kforce Inc | DLH Holdings vs. Korn Ferry | DLH Holdings vs. Hudson Global | DLH Holdings vs. Kelly Services B |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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