Correlation Between Leidos Holdings and CACI International

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

Diversification Opportunities for Leidos Holdings and CACI International

0.92

Correlation Coefficient

Leidos Holdings  CACI International

Almost no diversification

The 3 months correlation between Leidos and CACI is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International and Leidos 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 Leidos 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 Leidos Holdings i.e., Leidos Holdings and CACI International go up and down completely randomly.

Pair Corralation between Leidos Holdings and CACI International

Given the investment horizon of 90 days Leidos Holdings is expected to generate 0.71 times more return on investment than CACI International. However, Leidos Holdings is 1.41 times less risky than CACI International. It trades about -0.03 of its potential returns per unit of risk. CACI International is currently generating about -0.03 per unit of risk. If you would invest  14,274  in Leidos Holdings on December 28, 2024 and sell it today you would lose (640.00) from holding Leidos Holdings or give up 4.48% of portfolio value over 90 days.

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

Leidos Holdings  vs.  CACI International

Leidos Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leidos Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Leidos Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

CACI International

Risk-Adjusted Performance

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 Leidos Holdings and CACI International

The main advantage of trading using opposite Leidos Holdings and CACI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leidos 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 Leidos 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.