Correlation Between Booz Allen and VizConnect

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

Diversification Opportunities for Booz Allen and VizConnect

-0.11

Correlation Coefficient

Booz Allen  VizConnect

Good diversification

The 3 months correlation between Booz and VizConnect is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and VizConnect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VizConnect 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 VizConnect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VizConnect has no effect on the direction of Booz Allen i.e., Booz Allen and VizConnect go up and down completely randomly.

Pair Corralation between Booz Allen and VizConnect

Considering the 90-day investment horizon Booz Allen Hamilton is expected to under-perform the VizConnect. But the stock apears to be less risky and, when comparing its historical volatility, Booz Allen Hamilton is 6.9 times less risky than VizConnect. The stock trades about -0.24 of its potential returns per unit of risk. The VizConnect is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.04  in VizConnect on November 29, 2024 and sell it today you would earn a total of  0.01  from holding VizConnect or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Booz Allen Hamilton  vs.  VizConnect

Booz Allen Hamilton

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

VizConnect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VizConnect are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, VizConnect exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Booz Allen and VizConnect

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

The idea behind Booz Allen Hamilton and VizConnect 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.