Correlation Between Team and DLH Holdings
Can any of the company-specific risk be diversified away by investing in both Team and DLH Holdings 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 Team and DLH Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Team Inc and DLH Holdings Corp, you can compare the effects of market volatilities on Team and DLH Holdings 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 Team with a short position of DLH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team and DLH Holdings.
Diversification Opportunities for Team and DLH Holdings
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Team and DLH is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp and Team 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 Team Inc are associated (or correlated) with DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of Team i.e., Team and DLH Holdings go up and down completely randomly.
Pair Corralation between Team and DLH Holdings
Given the investment horizon of 90 days Team Inc is expected to generate 1.4 times more return on investment than DLH Holdings. However, Team is 1.4 times more volatile than DLH Holdings Corp. It trades about -0.01 of its potential returns per unit of risk. DLH Holdings Corp is currently generating about -0.27 per unit of risk. If you would invest 1,500 in Team Inc on December 17, 2024 and sell it today you would lose (111.00) from holding Team Inc or give up 7.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Team Inc vs. DLH Holdings Corp
Performance |
Timeline |
Team Inc |
DLH Holdings Corp |
Team and DLH Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Team and DLH Holdings
The main advantage of trading using opposite Team and DLH Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team position performs unexpectedly, DLH Holdings 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 DLH Holdings will offset losses from the drop in DLH Holdings' long position.The idea behind Team Inc and DLH Holdings 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.DLH Holdings vs. First Advantage Corp | DLH Holdings vs. Discount Print USA | DLH Holdings vs. Cass Information Systems | DLH Holdings vs. Civeo Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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