Correlation Between TransUnion and FTI Consulting

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

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

Diversification Opportunities for TransUnion and FTI Consulting

0.26

Correlation Coefficient

TransUnion  FTI Consulting

Modest diversification

The 3 months correlation between TransUnion and FTI is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding TransUnion and FTI Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTI Consulting and TransUnion 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 TransUnion 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 TransUnion i.e., TransUnion and FTI Consulting go up and down completely randomly.

Pair Corralation between TransUnion and FTI Consulting

Considering the 90-day investment horizon TransUnion is expected to generate 1.24 times more return on investment than FTI Consulting. However, TransUnion is 1.24 times more volatile than FTI Consulting. It trades about 0.15 of its potential returns per unit of risk. FTI Consulting is currently generating about -0.03 per unit of risk. If you would invest  7,148  in TransUnion on August 31, 2024 and sell it today you would earn a total of  3,002  from holding TransUnion or generate 42.0% return on investment over 90 days.

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

TransUnion  vs.  FTI Consulting

TransUnion

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TransUnion are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, TransUnion may actually be approaching a critical reversion point that can send shares even higher in December 2024.

FTI Consulting

Risk-Adjusted Performance

0 of 100

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 latest inconsistent performance, the Stock's fundamental 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 TransUnion and FTI Consulting

The main advantage of trading using opposite TransUnion and FTI Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransUnion 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 TransUnion 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.