Correlation Between Hackett and EMCORE
Can any of the company-specific risk be diversified away by investing in both Hackett and EMCORE 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 Hackett and EMCORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hackett Group and EMCORE, you can compare the effects of market volatilities on Hackett and EMCORE 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 Hackett with a short position of EMCORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hackett and EMCORE.
Diversification Opportunities for Hackett and EMCORE
Good diversification
The 3 months correlation between Hackett and EMCORE is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE and Hackett 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 The Hackett Group are associated (or correlated) with EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Hackett i.e., Hackett and EMCORE go up and down completely randomly.
Pair Corralation between Hackett and EMCORE
Given the investment horizon of 90 days The Hackett Group is expected to generate 0.24 times more return on investment than EMCORE. However, The Hackett Group is 4.08 times less risky than EMCORE. It trades about -0.28 of its potential returns per unit of risk. EMCORE is currently generating about -0.18 per unit of risk. If you would invest 2,502 in The Hackett Group on January 25, 2024 and sell it today you would lose (269.00) from holding The Hackett Group or give up 10.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Hackett Group vs. EMCORE
Performance |
Timeline |
Hackett Group |
EMCORE |
Hackett and EMCORE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hackett and EMCORE
The main advantage of trading using opposite Hackett and EMCORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hackett position performs unexpectedly, EMCORE 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 EMCORE will offset losses from the drop in EMCORE's long position.Hackett vs. CACI International | Hackett vs. CDW Corp | Hackett vs. Jack Henry Associates | Hackett vs. Broadridge Financial Solutions |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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