Correlation Between CACI International and Parsons Corp

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

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

Diversification Opportunities for CACI International and Parsons Corp

0.8

Correlation Coefficient

CACI International  Parsons Corp

Very poor diversification

The 3 months correlation between CACI and Parsons is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and Parsons Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parsons Corp 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 Parsons Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parsons Corp has no effect on the direction of CACI International i.e., CACI International and Parsons Corp go up and down completely randomly.

Pair Corralation between CACI International and Parsons Corp

Given the investment horizon of 90 days CACI International is expected to generate 1.02 times more return on investment than Parsons Corp. However, CACI International is 1.02 times more volatile than Parsons Corp. It trades about -0.03 of its potential returns per unit of risk. Parsons Corp is currently generating about -0.24 per unit of risk. If you would invest  40,223  in CACI International on December 28, 2024 and sell it today you would lose (2,624) from holding CACI International or give up 6.52% of portfolio value over 90 days.

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

CACI International  vs.  Parsons Corp

CACI International

Risk-Adjusted Performance

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.

Parsons Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parsons Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CACI International and Parsons Corp

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

The idea behind CACI International and Parsons Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.