Correlation Between LegalZoom and FTI Consulting

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

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

Diversification Opportunities for LegalZoom and FTI Consulting

-0.62

Correlation Coefficient

LegalZoom  FTI Consulting

Excellent diversification

The 3 months correlation between LegalZoom and FTI is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding LegalZoom and FTI Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTI Consulting and LegalZoom 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 LegalZoom are associated (or correlated) with FTI Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTI Consulting has no effect on the direction of LegalZoom i.e., LegalZoom and FTI Consulting go up and down completely randomly.

Pair Corralation between LegalZoom and FTI Consulting

Allowing for the 90-day total investment horizon LegalZoom is expected to generate 1.24 times more return on investment than FTI Consulting. However, LegalZoom is 1.24 times more volatile than FTI Consulting. It trades about 0.12 of its potential returns per unit of risk. FTI Consulting is currently generating about -0.11 per unit of risk. If you would invest  782.00  in LegalZoom on December 27, 2024 and sell it today you would earn a total of  144.50  from holding LegalZoom or generate 18.48% return on investment over 90 days.

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

LegalZoom  vs.  FTI Consulting

LegalZoom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LegalZoom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, LegalZoom showed solid returns over the last few months and may actually be approaching a breakup point.

FTI Consulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days FTI Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with LegalZoom and FTI Consulting

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

The idea behind LegalZoom and FTI Consulting 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.