Correlation Between Caldwell Partners and Hirequest

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

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

Diversification Opportunities for Caldwell Partners and Hirequest

-0.46

Correlation Coefficient

Caldwell Partners  Hirequest

Very good diversification

The 3 months correlation between Caldwell and Hirequest is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding The Caldwell Partners and Hirequest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirequest and Caldwell Partners 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 The Caldwell Partners are associated (or correlated) with Hirequest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirequest has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and Hirequest go up and down completely randomly.

Pair Corralation between Caldwell Partners and Hirequest

Assuming the 90 days horizon The Caldwell Partners is expected to generate 1.12 times more return on investment than Hirequest. However, Caldwell Partners is 1.12 times more volatile than Hirequest. It trades about 0.01 of its potential returns per unit of risk. Hirequest is currently generating about 0.01 per unit of risk. If you would invest  79.00  in The Caldwell Partners on November 29, 2024 and sell it today you would lose (1.00) from holding The Caldwell Partners or give up 1.27% of portfolio value over 90 days.

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

The Caldwell Partners  vs.  Hirequest

Caldwell Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Caldwell Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Caldwell Partners is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Hirequest

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Caldwell Partners and Hirequest

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

The idea behind The Caldwell Partners and Hirequest 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.