Correlation Between Leidos Holdings and Jack Henry

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

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

Diversification Opportunities for Leidos Holdings and Jack Henry

0.48

Correlation Coefficient

Leidos Holdings  Jack Henry

Very weak diversification

The 3 months correlation between Leidos and Jack is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and Jack Henry Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Henry Associates 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 Jack Henry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Henry Associates has no effect on the direction of Leidos Holdings i.e., Leidos Holdings and Jack Henry go up and down completely randomly.

Pair Corralation between Leidos Holdings and Jack Henry

Given the investment horizon of 90 days Leidos Holdings is expected to generate 2.51 times more return on investment than Jack Henry. However, Leidos Holdings is 2.51 times more volatile than Jack Henry Associates. It trades about 0.05 of its potential returns per unit of risk. Jack Henry Associates is currently generating about 0.02 per unit of risk. If you would invest  15,542  in Leidos Holdings on September 3, 2024 and sell it today you would earn a total of  871.00  from holding Leidos Holdings or generate 5.6% return on investment over 90 days.

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

Leidos Holdings  vs.  Jack Henry Associates

Leidos Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leidos Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Leidos Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jack Henry Associates

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Henry Associates are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Jack Henry is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Leidos Holdings and Jack Henry

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

The idea behind Leidos Holdings and Jack Henry Associates 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.