Correlation Between Heidrick Struggles and Caldwell Partners

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

Diversification Opportunities for Heidrick Struggles and Caldwell Partners

-0.47

Correlation Coefficient

Heidrick Struggles  Caldwell Partners

Very good diversification

The 3 months correlation between Heidrick and Caldwell is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Heidrick Struggles Internation and The Caldwell Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners 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 Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of Heidrick Struggles i.e., Heidrick Struggles and Caldwell Partners go up and down completely randomly.

Pair Corralation between Heidrick Struggles and Caldwell Partners

Given the investment horizon of 90 days Heidrick Struggles International is expected to generate 0.85 times more return on investment than Caldwell Partners. However, Heidrick Struggles International is 1.18 times less risky than Caldwell Partners. It trades about 0.15 of its potential returns per unit of risk. The Caldwell Partners is currently generating about 0.01 per unit of risk. If you would invest  3,747  in Heidrick Struggles International on September 2, 2024 and sell it today you would earn a total of  867.00  from holding Heidrick Struggles International or generate 23.14% return on investment over 90 days.

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

Heidrick Struggles Internation  vs.  The Caldwell Partners

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.

Caldwell Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Caldwell Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Caldwell Partners is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heidrick Struggles and Caldwell Partners

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

The idea behind Heidrick Struggles International and The Caldwell Partners 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.