Correlation Between Hudson Global and Barrett Business

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

By analyzing existing cross correlation between Hudson Global and Barrett Business Services, you can compare the effects of market volatilities on Hudson Global and Barrett 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 Hudson Global with a short position of Barrett Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Global and Barrett Business.

Diversification Opportunities for Hudson Global and Barrett Business

0.77

Correlation Coefficient

Hudson Global  Barrett Business

Poor diversification

The 3 months correlation between Hudson and Barrett is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Global and Barrett Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrett Business Services and Hudson Global 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 Hudson Global are associated (or correlated) with Barrett Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrett Business Services has no effect on the direction of Hudson Global i.e., Hudson Global and Barrett Business go up and down completely randomly.

Pair Corralation between Hudson Global and Barrett Business

Given the investment horizon of 90 days Hudson Global is expected to generate 4.19 times less return on investment than Barrett Business. In addition to that, Hudson Global is 1.85 times more volatile than Barrett Business Services. It trades about 0.02 of its total potential returns per unit of risk. Barrett Business Services is currently generating about 0.14 per unit of volatility. If you would invest  9,697  in Barrett Business Services on February 1, 2024 and sell it today you would earn a total of  2,453  from holding Barrett Business Services or generate 25.3% return on investment over 90 days.

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

Hudson Global  vs.  Barrett Business Services

Hudson Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Hudson Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Barrett Business Services

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barrett Business Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Barrett Business may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Hudson Global and Barrett Business

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

The idea behind Hudson Global and Barrett Business Services 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.