Correlation Between Booz Allen and Critical Solutions

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

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

Diversification Opportunities for Booz Allen and Critical Solutions

0.1

Correlation Coefficient

Booz Allen  Critical Solutions

Average diversification

The 3 months correlation between Booz and Critical is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Critical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Solutions and Booz Allen 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 Booz Allen Hamilton are associated (or correlated) with Critical Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Solutions has no effect on the direction of Booz Allen i.e., Booz Allen and Critical Solutions go up and down completely randomly.

Pair Corralation between Booz Allen and Critical Solutions

If you would invest  0.15  in Critical Solutions on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Critical Solutions or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Booz Allen Hamilton  vs.  Critical Solutions

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 fairly strong basic indicators, Booz Allen is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Critical Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Critical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Critical Solutions is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Booz Allen and Critical Solutions

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

The idea behind Booz Allen Hamilton and Critical Solutions 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.