Correlation Between Leidos Holdings and Information Services

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

By analyzing existing cross correlation between Leidos Holdings and Information Services Group, you can compare the effects of market volatilities on Leidos Holdings and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leidos Holdings and Information Services.

Diversification Opportunities for Leidos Holdings and Information Services

-0.33

Correlation Coefficient

Leidos Holdings  Information Services

Very good diversification

The 3 months correlation between Leidos and Information is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and Information Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Leidos Holdings i.e., Leidos Holdings and Information Services go up and down completely randomly.

Pair Corralation between Leidos Holdings and Information Services

Given the investment horizon of 90 days Leidos Holdings is expected to under-perform the Information Services. But the stock apears to be less risky and, when comparing its historical volatility, Leidos Holdings is 1.37 times less risky than Information Services. The stock trades about -0.42 of its potential returns per unit of risk. The Information Services Group is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  353.00  in Information Services Group on September 25, 2024 and sell it today you would lose (20.00) from holding Information Services Group or give up 5.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Leidos Holdings  vs.  Information Services Group

Leidos Holdings

Risk-Adjusted Performance

0 of 100

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.

Information Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Leidos Holdings and Information Services

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

The idea behind Leidos Holdings and Information Services Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.