Correlation Between Hackett and Digimarc

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

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

Diversification Opportunities for Hackett and Digimarc

0.5

Correlation Coefficient

Hackett  Digimarc

Very weak diversification

The 3 months correlation between Hackett and Digimarc is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc and Hackett 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 The Hackett Group are associated (or correlated) with Digimarc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digimarc has no effect on the direction of Hackett i.e., Hackett and Digimarc go up and down completely randomly.

Pair Corralation between Hackett and Digimarc

Given the investment horizon of 90 days The Hackett Group is expected to generate 0.76 times more return on investment than Digimarc. However, The Hackett Group is 1.31 times less risky than Digimarc. It trades about 0.12 of its potential returns per unit of risk. Digimarc is currently generating about 0.08 per unit of risk. If you would invest  2,639  in The Hackett Group on August 30, 2024 and sell it today you would earn a total of  507.00  from holding The Hackett Group or generate 19.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

The Hackett Group  vs.  Digimarc

Hackett Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hackett Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Hackett unveiled solid returns over the last few months and may actually be approaching a breakup point.

Digimarc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hackett and Digimarc

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

The idea behind The Hackett Group and Digimarc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.