Correlation Between CBIZ and Equifax

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

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

Diversification Opportunities for CBIZ and Equifax

0.03

Correlation Coefficient

CBIZ  Equifax

Significant diversification

The 3 months correlation between CBIZ and Equifax is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CBIZ Inc and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and CBIZ 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 CBIZ Inc are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of CBIZ i.e., CBIZ and Equifax go up and down completely randomly.

Pair Corralation between CBIZ and Equifax

Considering the 90-day investment horizon CBIZ Inc is expected to generate 0.78 times more return on investment than Equifax. However, CBIZ Inc is 1.28 times less risky than Equifax. It trades about -0.04 of its potential returns per unit of risk. Equifax is currently generating about -0.03 per unit of risk. If you would invest  8,178  in CBIZ Inc on December 2, 2024 and sell it today you would lose (361.00) from holding CBIZ Inc or give up 4.41% of portfolio value over 90 days.

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

CBIZ Inc  vs.  Equifax

CBIZ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBIZ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, CBIZ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Equifax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Equifax is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CBIZ and Equifax

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

The idea behind CBIZ Inc and Equifax 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.