Correlation Between CRA International and Hackett

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

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

Diversification Opportunities for CRA International and Hackett

0.6

Correlation Coefficient

CRA International  Hackett

Poor diversification

The 3 months correlation between CRA and Hackett is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and The Hackett Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hackett Group 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 Hackett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hackett Group has no effect on the direction of CRA International i.e., CRA International and Hackett go up and down completely randomly.

Pair Corralation between CRA International and Hackett

Given the investment horizon of 90 days CRA International is expected to generate 1.26 times more return on investment than Hackett. However, CRA International is 1.26 times more volatile than The Hackett Group. It trades about 0.06 of its potential returns per unit of risk. The Hackett Group is currently generating about 0.06 per unit of risk. If you would invest  10,399  in CRA International on December 28, 2024 and sell it today you would earn a total of  7,027  from holding CRA International or generate 67.57% return on investment over 90 days.

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

CRA International  vs.  The Hackett Group

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.

Hackett Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hackett Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Hackett is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CRA International and Hackett

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

The idea behind CRA International and The Hackett Group 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.