Correlation Between CRA International and 191216CV0

Can any of the company-specific risk be diversified away by investing in both CRA International and 191216CV0 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 191216CV0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CRA International and COCA COLA CO, you can compare the effects of market volatilities on CRA International and 191216CV0 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 191216CV0. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRA International and 191216CV0.

Diversification Opportunities for CRA International and 191216CV0

-0.43

Correlation Coefficient

CRA International  191216CV0

Very good diversification

The 3 months correlation between CRA and 191216CV0 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216CV0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of CRA International i.e., CRA International and 191216CV0 go up and down completely randomly.

Pair Corralation between CRA International and 191216CV0

Given the investment horizon of 90 days CRA International is expected to under-perform the 191216CV0. But the stock apears to be less risky and, when comparing its historical volatility, CRA International is 1.34 times less risky than 191216CV0. The stock trades about -0.07 of its potential returns per unit of risk. The COCA COLA CO is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,594  in COCA COLA CO on September 24, 2024 and sell it today you would earn a total of  29.00  from holding COCA COLA CO or generate 0.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

CRA International  vs.  COCA COLA CO

CRA International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

COCA A CO

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CV0 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CRA International and 191216CV0

The main advantage of trading using opposite CRA International and 191216CV0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRA International position performs unexpectedly, 191216CV0 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 191216CV0 will offset losses from the drop in 191216CV0's long position.

The idea behind CRA International and COCA COLA CO 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.