Correlation Between Exponent and Dun Bradstreet

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

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

Diversification Opportunities for Exponent and Dun Bradstreet

0.76

Correlation Coefficient

Exponent  Dun Bradstreet

Poor diversification

The 3 months correlation between Exponent and Dun is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and Dun Bradstreet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dun Bradstreet Holdings and Exponent 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 Exponent are associated (or correlated) with Dun Bradstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dun Bradstreet Holdings has no effect on the direction of Exponent i.e., Exponent and Dun Bradstreet go up and down completely randomly.

Pair Corralation between Exponent and Dun Bradstreet

Given the investment horizon of 90 days Exponent is expected to generate 0.52 times more return on investment than Dun Bradstreet. However, Exponent is 1.91 times less risky than Dun Bradstreet. It trades about -0.09 of its potential returns per unit of risk. Dun Bradstreet Holdings is currently generating about -0.19 per unit of risk. If you would invest  8,862  in Exponent on December 28, 2024 and sell it today you would lose (658.00) from holding Exponent or give up 7.42% of portfolio value over 90 days.

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

Exponent  vs.  Dun Bradstreet Holdings

Exponent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Dun Bradstreet Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dun Bradstreet Holdings 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Exponent and Dun Bradstreet

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

The idea behind Exponent and Dun Bradstreet Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.