Correlation Between CACI International and International Business
Can any of the company-specific risk be diversified away by investing in both CACI International and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CACI International and International Business Machines, you can compare the effects of market volatilities on CACI International and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of CACI International and International Business.
Diversification Opportunities for CACI International and International Business
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CACI and International is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of CACI International i.e., CACI International and International Business go up and down completely randomly.
Pair Corralation between CACI International and International Business
Given the investment horizon of 90 days CACI International is expected to generate 1.0 times more return on investment than International Business. However, CACI International is 1.0 times more volatile than International Business Machines. It trades about -0.11 of its potential returns per unit of risk. International Business Machines is currently generating about -0.28 per unit of risk. If you would invest 37,033 in CACI International on January 19, 2024 and sell it today you would lose (782.00) from holding CACI International or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CACI International vs. International Business Machine
Performance |
| Timeline |
| CACI International |
| International Business |
CACI International and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CACI International and International Business
The main advantage of trading using opposite CACI International and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CACI International position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| CACI International vs. Pfizer Inc | CACI International vs. Home Federal Bancorp | CACI International vs. Betterware De Mexico | CACI International vs. Heartland Financial USA |
| International Business vs. Pfizer Inc | International Business vs. Home Federal Bancorp | International Business vs. Betterware De Mexico | International Business vs. Heartland Financial USA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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