Correlation Between DLH Holdings and Industrials Portfolio

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

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

Diversification Opportunities for DLH Holdings and Industrials Portfolio

0.63

Correlation Coefficient

DLH Holdings  Industrials Portfolio

Poor diversification

The 3 months correlation between DLH and Industrials is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Industrials Portfolio Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrials Portfolio and DLH Holdings 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 DLH Holdings Corp are associated (or correlated) with Industrials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrials Portfolio has no effect on the direction of DLH Holdings i.e., DLH Holdings and Industrials Portfolio go up and down completely randomly.

Pair Corralation between DLH Holdings and Industrials Portfolio

Given the investment horizon of 90 days DLH Holdings Corp is expected to under-perform the Industrials Portfolio. In addition to that, DLH Holdings is 2.16 times more volatile than Industrials Portfolio Industrials. It trades about -0.3 of its total potential returns per unit of risk. Industrials Portfolio Industrials is currently generating about 0.0 per unit of volatility. If you would invest  4,050  in Industrials Portfolio Industrials on December 29, 2024 and sell it today you would lose (36.00) from holding Industrials Portfolio Industrials or give up 0.89% of portfolio value over 90 days.

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

DLH Holdings Corp  vs.  Industrials Portfolio Industri

DLH Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Industrials Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrials Portfolio Industrials has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Industrials Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DLH Holdings and Industrials Portfolio

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

The idea behind DLH Holdings Corp and Industrials Portfolio Industrials 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.