Correlation Between ICF International and Forrester Research

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

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

Diversification Opportunities for ICF International and Forrester Research

0.54

Correlation Coefficient

ICF International  Forrester Research

Very weak diversification

The 3 months correlation between ICF and Forrester is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ICF International and Forrester Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forrester Research and ICF 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 ICF International are associated (or correlated) with Forrester Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forrester Research has no effect on the direction of ICF International i.e., ICF International and Forrester Research go up and down completely randomly.

Pair Corralation between ICF International and Forrester Research

Given the investment horizon of 90 days ICF International is expected to under-perform the Forrester Research. But the stock apears to be less risky and, when comparing its historical volatility, ICF International is 2.26 times less risky than Forrester Research. The stock trades about -0.09 of its potential returns per unit of risk. The Forrester Research is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,955  in Forrester Research on February 23, 2024 and sell it today you would lose (139.00) from holding Forrester Research or give up 7.11% of portfolio value over 90 days.

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

ICF International  vs.  Forrester Research

ICF International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICF International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, ICF International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Forrester Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forrester Research has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Forrester Research is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ICF International and Forrester Research

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

The idea behind ICF International and Forrester Research 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.