Correlation Between Verisk Analytics and Booz Allen

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

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

Diversification Opportunities for Verisk Analytics and Booz Allen

-0.4

Correlation Coefficient

Verisk Analytics  Booz Allen

Very good diversification

The 3 months correlation between Verisk and Booz is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton and Verisk Analytics 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 Verisk Analytics are associated (or correlated) with Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of Verisk Analytics i.e., Verisk Analytics and Booz Allen go up and down completely randomly.

Pair Corralation between Verisk Analytics and Booz Allen

Given the investment horizon of 90 days Verisk Analytics is expected to generate 0.42 times more return on investment than Booz Allen. However, Verisk Analytics is 2.4 times less risky than Booz Allen. It trades about 0.08 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.07 per unit of risk. If you would invest  26,560  in Verisk Analytics on September 19, 2024 and sell it today you would earn a total of  1,462  from holding Verisk Analytics or generate 5.5% return on investment over 90 days.

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

Verisk Analytics  vs.  Booz Allen Hamilton

Verisk Analytics

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Booz Allen Hamilton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Booz Allen Hamilton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Verisk Analytics and Booz Allen

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

The idea behind Verisk Analytics and Booz Allen Hamilton 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.