Correlation Between CACI International and EPAM Systems
Can any of the company-specific risk be diversified away by investing in both CACI International and EPAM Systems 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 CACI International and EPAM Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CACI International and EPAM Systems, you can compare the effects of market volatilities on CACI International and EPAM Systems 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 CACI International with a short position of EPAM Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of CACI International and EPAM Systems.
Diversification Opportunities for CACI International and EPAM Systems
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between CACI and EPAM is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and EPAM Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPAM Systems and CACI International 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 CACI International are associated (or correlated) with EPAM Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPAM Systems has no effect on the direction of CACI International i.e., CACI International and EPAM Systems go up and down completely randomly.
Pair Corralation between CACI International and EPAM Systems
Given the investment horizon of 90 days CACI International is expected to generate 0.54 times more return on investment than EPAM Systems. However, CACI International is 1.87 times less risky than EPAM Systems. It trades about -0.06 of its potential returns per unit of risk. EPAM Systems is currently generating about -0.44 per unit of risk. If you would invest 36,870 in CACI International on January 20, 2024 and sell it today you would lose (464.00) from holding CACI International or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CACI International vs. EPAM Systems
Performance |
| Timeline |
| CACI International |
| EPAM Systems |
CACI International and EPAM Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CACI International and EPAM Systems
The main advantage of trading using opposite CACI International and EPAM Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CACI International position performs unexpectedly, EPAM Systems 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 EPAM Systems will offset losses from the drop in EPAM Systems' long position.| CACI International vs. Information Services Group | CACI International vs. Home Bancorp | CACI International vs. CRA International | CACI International vs. Aquagold International |
| EPAM Systems vs. Information Services Group | EPAM Systems vs. Home Bancorp | EPAM Systems vs. CRA International | EPAM Systems vs. Aquagold International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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