Correlation Between NextTrip and Booz Allen

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

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

Diversification Opportunities for NextTrip and Booz Allen

0.75

Correlation Coefficient

NextTrip  Booz Allen

Poor diversification

The 3 months correlation between NextTrip and Booz is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NextTrip and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton and NextTrip 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 NextTrip are associated (or correlated) with Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of NextTrip i.e., NextTrip and Booz Allen go up and down completely randomly.

Pair Corralation between NextTrip and Booz Allen

Given the investment horizon of 90 days NextTrip is expected to generate 3.13 times more return on investment than Booz Allen. However, NextTrip is 3.13 times more volatile than Booz Allen Hamilton. It trades about 0.02 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.11 per unit of risk. If you would invest  632.00  in NextTrip on December 28, 2024 and sell it today you would lose (48.00) from holding NextTrip or give up 7.59% of portfolio value over 90 days.

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

NextTrip  vs.  Booz Allen Hamilton

NextTrip

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NextTrip are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, NextTrip may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Booz Allen Hamilton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Booz Allen Hamilton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with NextTrip and Booz Allen

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

The idea behind NextTrip and Booz Allen Hamilton 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..