Correlation Between Kyndryl Holdings and CACI International

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

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

Diversification Opportunities for Kyndryl Holdings and CACI International

-0.24

Correlation Coefficient

Kyndryl Holdings  CACI International

Very good diversification

The 3 months correlation between Kyndryl and CACI is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International and Kyndryl Holdings 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 Kyndryl Holdings are associated (or correlated) with CACI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CACI International has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and CACI International go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and CACI International

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 1.38 times more return on investment than CACI International. However, Kyndryl Holdings is 1.38 times more volatile than CACI International. It trades about 0.24 of its potential returns per unit of risk. CACI International is currently generating about -0.02 per unit of risk. If you would invest  2,280  in Kyndryl Holdings on September 3, 2024 and sell it today you would earn a total of  1,191  from holding Kyndryl Holdings or generate 52.24% return on investment over 90 days.

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

Kyndryl Holdings  vs.  CACI International

Kyndryl Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

CACI International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CACI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, CACI International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kyndryl Holdings and CACI International

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

The idea behind Kyndryl Holdings and CACI 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.