Correlation Between Heidrick Struggles and CRA International

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

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

Diversification Opportunities for Heidrick Struggles and CRA International

0.7

Correlation Coefficient

Heidrick Struggles  CRA International

Poor diversification

The 3 months correlation between Heidrick and CRA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Heidrick Struggles Internation and CRA International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRA International and Heidrick Struggles 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 Heidrick Struggles International are associated (or correlated) with CRA International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRA International has no effect on the direction of Heidrick Struggles i.e., Heidrick Struggles and CRA International go up and down completely randomly.

Pair Corralation between Heidrick Struggles and CRA International

Given the investment horizon of 90 days Heidrick Struggles International is expected to generate 1.16 times more return on investment than CRA International. However, Heidrick Struggles is 1.16 times more volatile than CRA International. It trades about 0.06 of its potential returns per unit of risk. CRA International is currently generating about 0.07 per unit of risk. If you would invest  2,697  in Heidrick Struggles International on September 2, 2024 and sell it today you would earn a total of  1,917  from holding Heidrick Struggles International or generate 71.08% return on investment over 90 days.

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

Heidrick Struggles Internation  vs.  CRA International

Heidrick Struggles

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heidrick Struggles International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Heidrick Struggles demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CRA International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heidrick Struggles and CRA International

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

The idea behind Heidrick Struggles International and CRA International 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.