Correlation Between Barrett Business and DHI
Can any of the company-specific risk be diversified away by investing in both Barrett Business and DHI 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 Barrett Business and DHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barrett Business Services and DHI Group, you can compare the effects of market volatilities on Barrett Business and DHI 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 Barrett Business with a short position of DHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrett Business and DHI.
Diversification Opportunities for Barrett Business and DHI
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Barrett and DHI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Barrett Business Services and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group and Barrett Business 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 Barrett Business Services are associated (or correlated) with DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of Barrett Business i.e., Barrett Business and DHI go up and down completely randomly.
Pair Corralation between Barrett Business and DHI
Given the investment horizon of 90 days Barrett Business Services is expected to generate 0.3 times more return on investment than DHI. However, Barrett Business Services is 3.38 times less risky than DHI. It trades about -0.06 of its potential returns per unit of risk. DHI Group is currently generating about -0.03 per unit of risk. If you would invest 12,562 in Barrett Business Services on January 26, 2024 and sell it today you would lose (182.00) from holding Barrett Business Services or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrett Business Services vs. DHI Group
Performance |
| Timeline |
| Barrett Business Services |
| DHI Group |
Barrett Business and DHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrett Business and DHI
The main advantage of trading using opposite Barrett Business and DHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrett Business position performs unexpectedly, DHI 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 DHI will offset losses from the drop in DHI's long position.The idea behind Barrett Business Services and DHI Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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