Correlation Between EPAM Systems and CACI International

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

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

Diversification Opportunities for EPAM Systems and CACI International

-0.44

Correlation Coefficient

EPAM Systems  CACI International

Very good diversification

The 3 months correlation between EPAM and CACI is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International and EPAM Systems 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 EPAM Systems are associated (or correlated) with CACI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CACI International has no effect on the direction of EPAM Systems i.e., EPAM Systems and CACI International go up and down completely randomly.

Pair Corralation between EPAM Systems and CACI International

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the CACI International. In addition to that, EPAM Systems is 1.79 times more volatile than CACI International. It trades about -0.12 of its total potential returns per unit of risk. CACI International is currently generating about 0.25 per unit of volatility. If you would invest  34,656  in CACI International on February 4, 2024 and sell it today you would earn a total of  6,839  from holding CACI International or generate 19.73% return on investment over 90 days.

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

EPAM Systems  vs.  CACI International

EPAM Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

CACI International

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CACI International are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, CACI International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPAM Systems and CACI International

The main advantage of trading using opposite EPAM Systems and CACI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems position performs unexpectedly, CACI International 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 CACI International will offset losses from the drop in CACI International's long position.

The idea behind EPAM Systems and CACI International 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.