Correlation Between Booz Allen and Ipsos SA

Can any of the company-specific risk be diversified away by investing in both Booz Allen and Ipsos SA 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 Ipsos SA 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 Ipsos SA, you can compare the effects of market volatilities on Booz Allen and Ipsos SA 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 Ipsos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and Ipsos SA.

Diversification Opportunities for Booz Allen and Ipsos SA

-0.15

Correlation Coefficient

Booz Allen  Ipsos SA

Good diversification

The 3 months correlation between Booz and Ipsos is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Ipsos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsos SA 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 Ipsos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsos SA has no effect on the direction of Booz Allen i.e., Booz Allen and Ipsos SA go up and down completely randomly.

Pair Corralation between Booz Allen and Ipsos SA

Considering the 90-day investment horizon Booz Allen Hamilton is expected to under-perform the Ipsos SA. In addition to that, Booz Allen is 4.14 times more volatile than Ipsos SA. It trades about -0.04 of its total potential returns per unit of risk. Ipsos SA is currently generating about -0.11 per unit of volatility. If you would invest  6,511  in Ipsos SA on September 12, 2024 and sell it today you would lose (278.00) from holding Ipsos SA or give up 4.27% of portfolio value over 90 days.

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

Booz Allen Hamilton  vs.  Ipsos SA

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.

Ipsos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ipsos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ipsos SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Booz Allen and Ipsos SA

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

The idea behind Booz Allen Hamilton and Ipsos SA 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 CEOs Directory module to screen CEOs from public companies around the world.