Correlation Between Booz Allen and Forrester Research

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

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

Diversification Opportunities for Booz Allen and Forrester Research

-0.57

Correlation Coefficient

Booz Allen  Forrester Research

Excellent diversification

The 3 months correlation between Booz and Forrester is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Forrester Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forrester Research and Booz Allen 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 Booz Allen Hamilton 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 Booz Allen i.e., Booz Allen and Forrester Research go up and down completely randomly.

Pair Corralation between Booz Allen and Forrester Research

Considering the 90-day investment horizon Booz Allen Hamilton is expected to generate 0.65 times more return on investment than Forrester Research. However, Booz Allen Hamilton is 1.54 times less risky than Forrester Research. It trades about 0.08 of its potential returns per unit of risk. Forrester Research is currently generating about -0.07 per unit of risk. If you would invest  8,256  in Booz Allen Hamilton on January 25, 2024 and sell it today you would earn a total of  6,340  from holding Booz Allen Hamilton or generate 76.79% return on investment over 90 days.

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

Booz Allen Hamilton  vs.  Forrester Research

Booz Allen Hamilton

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Booz Allen Hamilton are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Booz Allen demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Booz Allen and Forrester Research

The main advantage of trading using opposite Booz Allen and Forrester Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booz Allen 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 Booz Allen Hamilton 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.