Correlation Between Huron Consulting and Exponent

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

Diversification Opportunities for Huron Consulting and Exponent

0.06

Correlation Coefficient

Huron Consulting  Exponent

Significant diversification

The 3 months correlation between Huron and Exponent is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Huron Consulting Group and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent 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 Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Huron Consulting i.e., Huron Consulting and Exponent go up and down completely randomly.

Pair Corralation between Huron Consulting and Exponent

Given the investment horizon of 90 days Huron Consulting Group is expected to generate 1.15 times more return on investment than Exponent. However, Huron Consulting is 1.15 times more volatile than Exponent. It trades about 0.08 of its potential returns per unit of risk. Exponent is currently generating about -0.09 per unit of risk. If you would invest  12,056  in Huron Consulting Group on November 20, 2024 and sell it today you would earn a total of  798.00  from holding Huron Consulting Group or generate 6.62% return on investment over 90 days.

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

Huron Consulting Group  vs.  Exponent

Huron Consulting

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Huron Consulting Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Huron Consulting may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Exponent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Huron Consulting and Exponent

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

The idea behind Huron Consulting Group and Exponent 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.