Correlation Between Resources Connection and Booz Allen

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

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

Diversification Opportunities for Resources Connection and Booz Allen

-0.18

Correlation Coefficient

Resources Connection  Booz Allen

Good diversification

The 3 months correlation between Resources and Booz is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Resources Connection 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 Resources Connection 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 Resources Connection 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 Resources Connection i.e., Resources Connection and Booz Allen go up and down completely randomly.

Pair Corralation between Resources Connection and Booz Allen

Considering the 90-day investment horizon Resources Connection is expected to under-perform the Booz Allen. In addition to that, Resources Connection is 1.22 times more volatile than Booz Allen Hamilton. It trades about -0.06 of its total potential returns per unit of risk. Booz Allen Hamilton is currently generating about 0.04 per unit of volatility. If you would invest  10,137  in Booz Allen Hamilton on September 20, 2024 and sell it today you would earn a total of  3,200  from holding Booz Allen Hamilton or generate 31.57% return on investment over 90 days.

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

Resources Connection  vs.  Booz Allen Hamilton

Resources Connection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resources Connection has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Booz Allen Hamilton

Risk-Adjusted Performance

0 of 100

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Resources Connection and Booz Allen

The main advantage of trading using opposite Resources Connection and Booz Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resources Connection 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 Resources Connection 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.