Correlation Between TransUnion and ICF International

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

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

Diversification Opportunities for TransUnion and ICF International

0.49

Correlation Coefficient

TransUnion  ICF International

Very weak diversification

The 3 months correlation between TransUnion and ICF is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TransUnion and ICF International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICF International and TransUnion 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 TransUnion are associated (or correlated) with ICF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICF International has no effect on the direction of TransUnion i.e., TransUnion and ICF International go up and down completely randomly.

Pair Corralation between TransUnion and ICF International

Considering the 90-day investment horizon TransUnion is expected to generate 0.76 times more return on investment than ICF International. However, TransUnion is 1.32 times less risky than ICF International. It trades about 0.08 of its potential returns per unit of risk. ICF International is currently generating about -0.11 per unit of risk. If you would invest  9,446  in TransUnion on September 1, 2024 and sell it today you would earn a total of  704.00  from holding TransUnion or generate 7.45% return on investment over 90 days.

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

TransUnion  vs.  ICF International

TransUnion

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TransUnion are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, TransUnion may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ICF International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICF International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with TransUnion and ICF International

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

The idea behind TransUnion and ICF International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.