Correlation Between Perficient and Parsons Corp

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

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

Diversification Opportunities for Perficient and Parsons Corp

-0.61

Correlation Coefficient

Perficient  Parsons Corp

Excellent diversification

The 3 months correlation between Perficient and Parsons is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Perficient and Parsons Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parsons Corp and Perficient 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 Perficient are associated (or correlated) with Parsons Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parsons Corp has no effect on the direction of Perficient i.e., Perficient and Parsons Corp go up and down completely randomly.

Pair Corralation between Perficient and Parsons Corp

Given the investment horizon of 90 days Perficient is expected to generate 1.82 times less return on investment than Parsons Corp. In addition to that, Perficient is 2.02 times more volatile than Parsons Corp. It trades about 0.02 of its total potential returns per unit of risk. Parsons Corp is currently generating about 0.08 per unit of volatility. If you would invest  4,819  in Parsons Corp on September 28, 2024 and sell it today you would earn a total of  4,494  from holding Parsons Corp or generate 93.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.55%
Values	Daily Returns

Perficient  vs.  Parsons Corp

Perficient

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Perficient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain technical and fundamental indicators, Perficient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Parsons Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parsons Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Perficient and Parsons Corp

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

The idea behind Perficient and Parsons Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.