Correlation Between CACI International and Akamai Technologies

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

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

Diversification Opportunities for CACI International and Akamai Technologies

-0.75

Correlation Coefficient

CACI International  Akamai Technologies

Pay attention - limited upside

The 3 months correlation between CACI and Akamai is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies and CACI 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 CACI International are associated (or correlated) with Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of CACI International i.e., CACI International and Akamai Technologies go up and down completely randomly.

Pair Corralation between CACI International and Akamai Technologies

Given the investment horizon of 90 days CACI International is expected to generate 0.94 times more return on investment than Akamai Technologies. However, CACI International is 1.06 times less risky than Akamai Technologies. It trades about 0.11 of its potential returns per unit of risk. Akamai Technologies is currently generating about -0.27 per unit of risk. If you would invest  37,374  in CACI International on January 24, 2024 and sell it today you would earn a total of  869.00  from holding CACI International or generate 2.33% return on investment over 90 days.

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

CACI International  vs.  Akamai Technologies

CACI International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CACI International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, CACI International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Akamai Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CACI International and Akamai Technologies

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

The idea behind CACI International and Akamai Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.