Correlation Between CACI International and Science Applications

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

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

Diversification Opportunities for CACI International and Science Applications

0.93

Correlation Coefficient

CACI International  Science Applications

Almost no diversification

The 3 months correlation between CACI and Science is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of CACI International i.e., CACI International and Science Applications go up and down completely randomly.

Pair Corralation between CACI International and Science Applications

Given the investment horizon of 90 days CACI International is expected to under-perform the Science Applications. In addition to that, CACI International is 1.06 times more volatile than Science Applications International. It trades about -0.03 of its total potential returns per unit of risk. Science Applications International is currently generating about 0.02 per unit of volatility. If you would invest  11,046  in Science Applications International on December 28, 2024 and sell it today you would earn a total of  207.00  from holding Science Applications International or generate 1.87% return on investment over 90 days.

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

CACI International  vs.  Science Applications Internati

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Science Applications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Science Applications International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Science Applications is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CACI International and Science Applications

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

The idea behind CACI International and Science Applications International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.