Correlation Between Thoughtworks Holding and Hackett
Can any of the company-specific risk be diversified away by investing in both Thoughtworks Holding and Hackett 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 Thoughtworks Holding and Hackett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thoughtworks Holding and The Hackett Group, you can compare the effects of market volatilities on Thoughtworks Holding and Hackett 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 Thoughtworks Holding with a short position of Hackett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thoughtworks Holding and Hackett.
Diversification Opportunities for Thoughtworks Holding and Hackett
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thoughtworks and Hackett is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Thoughtworks Holding and The Hackett Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hackett Group and Thoughtworks Holding 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 Thoughtworks Holding are associated (or correlated) with Hackett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hackett Group has no effect on the direction of Thoughtworks Holding i.e., Thoughtworks Holding and Hackett go up and down completely randomly.
Pair Corralation between Thoughtworks Holding and Hackett
Given the investment horizon of 90 days Thoughtworks Holding is expected to generate 7.09 times less return on investment than Hackett. But when comparing it to its historical volatility, Thoughtworks Holding is 6.29 times less risky than Hackett. It trades about 0.11 of its potential returns per unit of risk. The Hackett Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,663 in The Hackett Group on September 17, 2024 and sell it today you would earn a total of 531.00 from holding The Hackett Group or generate 19.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 64.62% |
Values | Daily Returns |
Thoughtworks Holding vs. The Hackett Group
Performance |
Timeline |
Thoughtworks Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Hackett Group |
Thoughtworks Holding and Hackett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thoughtworks Holding and Hackett
The main advantage of trading using opposite Thoughtworks Holding and Hackett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thoughtworks Holding position performs unexpectedly, Hackett 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 Hackett will offset losses from the drop in Hackett's long position.Thoughtworks Holding vs. ExlService Holdings | Thoughtworks Holding vs. Genpact Limited | Thoughtworks Holding vs. ASGN Inc | Thoughtworks Holding vs. TTEC Holdings |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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