Correlation Between ICF International and Resources Connection

Can any of the company-specific risk be diversified away by investing in both ICF International and Resources Connection 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 ICF International and Resources Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICF International and Resources Connection, you can compare the effects of market volatilities on ICF International and Resources Connection 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 ICF International with a short position of Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICF International and Resources Connection.

Diversification Opportunities for ICF International and Resources Connection

0.37

Correlation Coefficient

ICF International  Resources Connection

Weak diversification

The 3 months correlation between ICF and Resources is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ICF International and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection and ICF International 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 ICF International are associated (or correlated) with Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of ICF International i.e., ICF International and Resources Connection go up and down completely randomly.

Pair Corralation between ICF International and Resources Connection

Given the investment horizon of 90 days ICF International is expected to under-perform the Resources Connection. In addition to that, ICF International is 1.03 times more volatile than Resources Connection. It trades about -0.21 of its total potential returns per unit of risk. Resources Connection is currently generating about -0.03 per unit of volatility. If you would invest  815.00  in Resources Connection on November 20, 2024 and sell it today you would lose (29.00) from holding Resources Connection or give up 3.56% of portfolio value over 90 days.

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

ICF International  vs.  Resources Connection

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.

Resources Connection

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resources Connection has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Resources Connection is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ICF International and Resources Connection

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

The idea behind ICF International and Resources Connection 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.