Correlation Between Blue Diamond and Booz Allen

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

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

Diversification Opportunities for Blue Diamond and Booz Allen

-0.22

Correlation Coefficient

Blue Diamond  Booz Allen

Very good diversification

The 3 months correlation between Blue and Booz is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Blue Diamond Ventures 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 Blue Diamond 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 Blue Diamond Ventures 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 Blue Diamond i.e., Blue Diamond and Booz Allen go up and down completely randomly.

Pair Corralation between Blue Diamond and Booz Allen

Given the investment horizon of 90 days Blue Diamond Ventures is expected to generate 14.56 times more return on investment than Booz Allen. However, Blue Diamond is 14.56 times more volatile than Booz Allen Hamilton. It trades about 0.17 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.02 per unit of risk. If you would invest  0.01  in Blue Diamond Ventures on September 4, 2024 and sell it today you would earn a total of  0.01  from holding Blue Diamond Ventures or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Blue Diamond Ventures  vs.  Booz Allen Hamilton

Blue Diamond Ventures

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Diamond Ventures are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Blue Diamond showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Blue Diamond and Booz Allen

The main advantage of trading using opposite Blue Diamond and Booz Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Diamond 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 Blue Diamond Ventures 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.