Correlation Between Hackett and Parsons Corp

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

By analyzing existing cross correlation between The Hackett Group and Parsons Corp, you can compare the effects of market volatilities on Hackett and Parsons Corp 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 Hackett with a short position of Parsons Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hackett and Parsons Corp.

Diversification Opportunities for Hackett and Parsons Corp

0.41

Correlation Coefficient

Hackett  Parsons Corp

Very weak diversification

The 3 months correlation between Hackett and Parsons is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group and Parsons Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parsons Corp and Hackett 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 The Hackett Group are associated (or correlated) with Parsons Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parsons Corp has no effect on the direction of Hackett i.e., Hackett and Parsons Corp go up and down completely randomly.

Pair Corralation between Hackett and Parsons Corp

Given the investment horizon of 90 days The Hackett Group is expected to under-perform the Parsons Corp. In addition to that, Hackett is 1.18 times more volatile than Parsons Corp. It trades about -0.02 of its total potential returns per unit of risk. Parsons Corp is currently generating about 0.17 per unit of volatility. If you would invest  6,561  in Parsons Corp on February 2, 2024 and sell it today you would earn a total of  1,169  from holding Parsons Corp or generate 17.82% return on investment over 90 days.

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

The Hackett Group  vs.  Parsons Corp

Hackett Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hackett Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Hackett is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Parsons Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parsons Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Parsons Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hackett and Parsons Corp

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

The idea behind The Hackett Group and Parsons Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.