Correlation Between FTI Consulting and Verisk Analytics

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

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

Diversification Opportunities for FTI Consulting and Verisk Analytics

-0.26

Correlation Coefficient

FTI Consulting  Verisk Analytics

Very good diversification

The 3 months correlation between FTI and Verisk is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding FTI Consulting and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics and FTI Consulting 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 FTI Consulting are associated (or correlated) with Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of FTI Consulting i.e., FTI Consulting and Verisk Analytics go up and down completely randomly.

Pair Corralation between FTI Consulting and Verisk Analytics

Considering the 90-day investment horizon FTI Consulting is expected to under-perform the Verisk Analytics. In addition to that, FTI Consulting is 1.87 times more volatile than Verisk Analytics. It trades about -0.15 of its total potential returns per unit of risk. Verisk Analytics is currently generating about -0.01 per unit of volatility. If you would invest  29,381  in Verisk Analytics on November 29, 2024 and sell it today you would lose (370.00) from holding Verisk Analytics or give up 1.26% of portfolio value over 90 days.

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

FTI Consulting  vs.  Verisk Analytics

FTI Consulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days FTI Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Verisk Analytics

Risk-Adjusted Performance

Weak

Over the last 90 days Verisk Analytics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FTI Consulting and Verisk Analytics

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

The idea behind FTI Consulting and Verisk Analytics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.