Correlation Between Verisk Analytics and ICF International

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

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

Diversification Opportunities for Verisk Analytics and ICF International

-0.67

Correlation Coefficient

Verisk Analytics  ICF International

Excellent diversification

The 3 months correlation between Verisk and ICF is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and ICF International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICF International 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 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 Verisk Analytics i.e., Verisk Analytics and ICF International go up and down completely randomly.

Pair Corralation between Verisk Analytics and ICF International

Given the investment horizon of 90 days Verisk Analytics is expected to generate 0.48 times more return on investment than ICF International. However, Verisk Analytics is 2.09 times less risky than ICF International. It trades about 0.11 of its potential returns per unit of risk. ICF International is currently generating about -0.11 per unit of risk. If you would invest  27,396  in Verisk Analytics on September 3, 2024 and sell it today you would earn a total of  2,025  from holding Verisk Analytics or generate 7.39% return on investment over 90 days.

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

Verisk Analytics  vs.  ICF International

Verisk Analytics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Verisk Analytics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Verisk Analytics and ICF International

The main advantage of trading using opposite Verisk Analytics and ICF International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verisk Analytics 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 Verisk Analytics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.