Correlation Between Hackett and Leidos Holdings

Can any of the company-specific risk be diversified away by investing in both Hackett and Leidos Holdings 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 Leidos Holdings 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 Leidos Holdings, you can compare the effects of market volatilities on Hackett and Leidos Holdings 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 Leidos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hackett and Leidos Holdings.

Diversification Opportunities for Hackett and Leidos Holdings

0.1

Correlation Coefficient

Hackett  Leidos Holdings

Average diversification

The 3 months correlation between Hackett and Leidos is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group and Leidos Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leidos Holdings 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 Leidos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leidos Holdings has no effect on the direction of Hackett i.e., Hackett and Leidos Holdings go up and down completely randomly.

Pair Corralation between Hackett and Leidos Holdings

Given the investment horizon of 90 days The Hackett Group is expected to generate 0.55 times more return on investment than Leidos Holdings. However, The Hackett Group is 1.82 times less risky than Leidos Holdings. It trades about -0.06 of its potential returns per unit of risk. Leidos Holdings is currently generating about -0.04 per unit of risk. If you would invest  3,057  in The Hackett Group on December 29, 2024 and sell it today you would lose (140.00) from holding The Hackett Group or give up 4.58% of portfolio value over 90 days.

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

The Hackett Group  vs.  Leidos Holdings

Hackett Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hackett Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Hackett is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Leidos Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leidos Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Leidos Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hackett and Leidos Holdings

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

The idea behind The Hackett Group and Leidos 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..