Correlation Between Booz Allen and Winnebago Industries

Can any of the company-specific risk be diversified away by investing in both Booz Allen and Winnebago Industries 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 Winnebago Industries 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 Winnebago Industries, you can compare the effects of market volatilities on Booz Allen and Winnebago Industries 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 Winnebago Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and Winnebago Industries.

Diversification Opportunities for Booz Allen and Winnebago Industries

-0.24

Correlation Coefficient

Booz Allen  Winnebago Industries

Very good diversification

The 3 months correlation between Booz and Winnebago is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Winnebago Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winnebago Industries 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 Winnebago Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winnebago Industries has no effect on the direction of Booz Allen i.e., Booz Allen and Winnebago Industries go up and down completely randomly.

Pair Corralation between Booz Allen and Winnebago Industries

Considering the 90-day investment horizon Booz Allen Hamilton is expected to generate 0.63 times more return on investment than Winnebago Industries. However, Booz Allen Hamilton is 1.58 times less risky than Winnebago Industries. It trades about 0.03 of its potential returns per unit of risk. Winnebago Industries is currently generating about -0.08 per unit of risk. If you would invest  14,905  in Booz Allen Hamilton on March 3, 2024 and sell it today you would earn a total of  316.00  from holding Booz Allen Hamilton or generate 2.12% return on investment over 90 days.

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

Booz Allen Hamilton  vs.  Winnebago Industries

Booz Allen Hamilton

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Booz Allen Hamilton are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Booz Allen is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Winnebago Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winnebago Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Booz Allen and Winnebago Industries

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

The idea behind Booz Allen Hamilton and Winnebago Industries 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.