Correlation Between Huron Consulting and Booz Allen

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

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

Diversification Opportunities for Huron Consulting and Booz Allen

-0.79

Correlation Coefficient

Huron Consulting  Booz Allen

Pay attention - limited upside

The 3 months correlation between Huron and Booz is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Huron Consulting Group and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton and Huron 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 Huron Consulting Group are associated (or correlated) with Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of Huron Consulting i.e., Huron Consulting and Booz Allen go up and down completely randomly.

Pair Corralation between Huron Consulting and Booz Allen

Given the investment horizon of 90 days Huron Consulting Group is expected to generate 1.18 times more return on investment than Booz Allen. However, Huron Consulting is 1.18 times more volatile than Booz Allen Hamilton. It trades about 0.1 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.12 per unit of risk. If you would invest  12,295  in Huron Consulting Group on December 27, 2024 and sell it today you would earn a total of  1,956  from holding Huron Consulting Group or generate 15.91% return on investment over 90 days.

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

Huron Consulting Group  vs.  Booz Allen Hamilton

Huron Consulting

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huron Consulting Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Huron Consulting displayed solid returns over the last few months and may actually be approaching a breakup point.

Booz Allen Hamilton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Booz Allen Hamilton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Huron Consulting and Booz Allen

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

The idea behind Huron Consulting Group and Booz Allen Hamilton 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.