Correlation Between CACI International and International Business

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

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

Diversification Opportunities for CACI International and International Business

0.09

Correlation Coefficient

CACI International  International Business

Significant diversification

The 3 months correlation between CACI and International is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and CACI International 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 CACI International are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of CACI International i.e., CACI International and International Business go up and down completely randomly.

Pair Corralation between CACI International and International Business

Given the investment horizon of 90 days CACI International is expected to under-perform the International Business. In addition to that, CACI International is 1.47 times more volatile than International Business Machines. It trades about -0.02 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.15 per unit of volatility. If you would invest  19,971  in International Business Machines on September 3, 2024 and sell it today you would earn a total of  2,770  from holding International Business Machines or generate 13.87% return on investment over 90 days.

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

CACI International  vs.  International Business Machine

CACI International

Risk-Adjusted Performance

0 of 100

Very Weak

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

International Business

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CACI International and International Business

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

The idea behind CACI International and International Business Machines 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.