Correlation Between Huron Consulting and FTI Consulting

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

Diversification Opportunities for Huron Consulting and FTI Consulting

-0.69

Correlation Coefficient

Huron Consulting  FTI Consulting

Excellent diversification

The 3 months correlation between Huron and FTI is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Huron Consulting Group and FTI Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTI Consulting 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 FTI Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTI Consulting has no effect on the direction of Huron Consulting i.e., Huron Consulting and FTI Consulting go up and down completely randomly.

Pair Corralation between Huron Consulting and FTI Consulting

Given the investment horizon of 90 days Huron Consulting Group is expected to generate 1.08 times more return on investment than FTI Consulting. However, Huron Consulting is 1.08 times more volatile than FTI Consulting. It trades about 0.11 of its potential returns per unit of risk. FTI Consulting is currently generating about -0.07 per unit of risk. If you would invest  10,886  in Huron Consulting Group on August 31, 2024 and sell it today you would earn a total of  1,484  from holding Huron Consulting Group or generate 13.63% 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.  FTI Consulting

Huron Consulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huron Consulting Group are ranked lower than 8 (%) 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.

FTI Consulting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FTI Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental 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 FTI Consulting

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

The idea behind Huron Consulting Group and FTI Consulting 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.