Correlation Between Experian PLC and Booz Allen

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

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

Diversification Opportunities for Experian PLC and Booz Allen

0.83

Correlation Coefficient

Experian PLC  Booz Allen

Very poor diversification

The 3 months correlation between Experian and Booz is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Experian PLC and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton and Experian PLC 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 Experian PLC are associated (or correlated) with Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of Experian PLC i.e., Experian PLC and Booz Allen go up and down completely randomly.

Pair Corralation between Experian PLC and Booz Allen

Assuming the 90 days horizon Experian PLC is expected to generate 0.77 times more return on investment than Booz Allen. However, Experian PLC is 1.29 times less risky than Booz Allen. It trades about -0.04 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.03 per unit of risk. If you would invest  4,767  in Experian PLC on October 13, 2024 and sell it today you would lose (492.00) from holding Experian PLC or give up 10.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.3%
Values	Daily Returns

Experian PLC  vs.  Booz Allen Hamilton

Experian PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Booz Allen Hamilton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Booz Allen Hamilton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Experian PLC and Booz Allen

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

The idea behind Experian PLC and Booz Allen Hamilton 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.