Correlation Between CRA International and CACI International

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

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

Diversification Opportunities for CRA International and CACI International

0.05

Correlation Coefficient

CRA International  CACI International

Significant diversification

The 3 months correlation between CRA and CACI is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International and CRA 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 CRA International are associated (or correlated) with CACI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CACI International has no effect on the direction of CRA International i.e., CRA International and CACI International go up and down completely randomly.

Pair Corralation between CRA International and CACI International

Given the investment horizon of 90 days CRA International is expected to generate 1.65 times more return on investment than CACI International. However, CRA International is 1.65 times more volatile than CACI International. It trades about -0.07 of its potential returns per unit of risk. CACI International is currently generating about -0.42 per unit of risk. If you would invest  19,335  in CRA International on September 23, 2024 and sell it today you would lose (880.00) from holding CRA International or give up 4.55% of portfolio value over 90 days.

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

CRA International  vs.  CACI International

CRA International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CRA International and CACI International

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

The idea behind CRA International and CACI 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.