Correlation Between Huron Consulting and ICF International

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

Diversification Opportunities for Huron Consulting and ICF International

-0.44

Correlation Coefficient

Huron Consulting  ICF International

Very good diversification

The 3 months correlation between Huron and ICF is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Huron Consulting Group and ICF International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICF International 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 ICF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICF International has no effect on the direction of Huron Consulting i.e., Huron Consulting and ICF International go up and down completely randomly.

Pair Corralation between Huron Consulting and ICF International

Given the investment horizon of 90 days Huron Consulting Group is expected to generate 1.52 times more return on investment than ICF International. However, Huron Consulting is 1.52 times more volatile than ICF International. It trades about 0.13 of its potential returns per unit of risk. ICF International is currently generating about -0.28 per unit of risk. If you would invest  12,281  in Huron Consulting Group on November 29, 2024 and sell it today you would earn a total of  2,537  from holding Huron Consulting Group or generate 20.66% return on investment over 90 days.

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

Huron Consulting Group  vs.  ICF International

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 9 (%) 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.

ICF International

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Huron Consulting and ICF International

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

The idea behind Huron Consulting Group and ICF 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.