Correlation Between CRA International and CBIZ

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

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

Diversification Opportunities for CRA International and CBIZ

0.47

Correlation Coefficient

CRA International  CBIZ

Very weak diversification

The 3 months correlation between CRA and CBIZ is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc 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 CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of CRA International i.e., CRA International and CBIZ go up and down completely randomly.

Pair Corralation between CRA International and CBIZ

Given the investment horizon of 90 days CRA International is expected to generate 1.6 times more return on investment than CBIZ. However, CRA International is 1.6 times more volatile than CBIZ Inc. It trades about -0.02 of its potential returns per unit of risk. CBIZ Inc is currently generating about -0.11 per unit of risk. If you would invest  18,862  in CRA International on December 26, 2024 and sell it today you would lose (953.00) from holding CRA International or give up 5.05% of portfolio value over 90 days.

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

CRA International  vs.  CBIZ Inc

CRA International

Risk-Adjusted Performance

Very Weak

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

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 latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CRA International and CBIZ

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

The idea behind CRA International and CBIZ Inc 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.