Correlation Between Castellum and Parsons Corp

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

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

Diversification Opportunities for Castellum and Parsons Corp

-0.27

Correlation Coefficient

Castellum  Parsons Corp

Very good diversification

The 3 months correlation between Castellum and Parsons is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Castellum and Parsons Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parsons Corp and Castellum 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 Castellum are associated (or correlated) with Parsons Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parsons Corp has no effect on the direction of Castellum i.e., Castellum and Parsons Corp go up and down completely randomly.

Pair Corralation between Castellum and Parsons Corp

Considering the 90-day investment horizon Castellum is expected to generate 3.18 times more return on investment than Parsons Corp. However, Castellum is 3.18 times more volatile than Parsons Corp. It trades about 0.12 of its potential returns per unit of risk. Parsons Corp is currently generating about 0.05 per unit of risk. If you would invest  16.00  in Castellum on September 5, 2024 and sell it today you would earn a total of  7.00  from holding Castellum or generate 43.75% return on investment over 90 days.

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

Castellum  vs.  Parsons Corp

Castellum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

Parsons Corp

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parsons Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Parsons Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Castellum and Parsons Corp

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

The idea behind Castellum and Parsons Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.