Correlation Between FTI Consulting and Willdan

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

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

Diversification Opportunities for FTI Consulting and Willdan

0.28

Correlation Coefficient

FTI Consulting  Willdan

Modest diversification

The 3 months correlation between FTI and Willdan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FTI Consulting and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group 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 Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of FTI Consulting i.e., FTI Consulting and Willdan go up and down completely randomly.

Pair Corralation between FTI Consulting and Willdan

Considering the 90-day investment horizon FTI Consulting is expected to under-perform the Willdan. But the stock apears to be less risky and, when comparing its historical volatility, FTI Consulting is 1.96 times less risky than Willdan. The stock trades about -0.11 of its potential returns per unit of risk. The Willdan Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,851  in Willdan Group on December 19, 2024 and sell it today you would earn a total of  341.00  from holding Willdan Group or generate 8.85% return on investment over 90 days.

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

FTI Consulting  vs.  Willdan Group

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Willdan Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Willdan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTI Consulting and Willdan

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

The idea behind FTI Consulting and Willdan Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.