Correlation Between Pitney Bowes and Science Applications

Can any of the company-specific risk be diversified away by investing in both Pitney Bowes and Science Applications 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 Pitney Bowes and Science Applications into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pitney Bowes and Science Applications

-0.24

Correlation Coefficient

Pitney Bowes  Science Applications

Very good diversification

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

Pair Corralation between Pitney Bowes and Science Applications

Considering the 90-day investment horizon Pitney Bowes is expected to generate 1.23 times less return on investment than Science Applications. In addition to that, Pitney Bowes is 2.44 times more volatile than Science Applications International. It trades about 0.02 of its total potential returns per unit of risk. Science Applications International is currently generating about 0.05 per unit of volatility. If you would invest  12,708  in Science Applications International on January 26, 2024 and sell it today you would earn a total of  139.00  from holding Science Applications International or generate 1.09% return on investment over 90 days.

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

Pitney Bowes  vs.  Science Applications Internati

Pitney Bowes

Risk-Adjusted Performance

0 of 100

Very Weak

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

Science Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Science Applications International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Science Applications is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pitney Bowes and Science Applications

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

The idea behind Pitney Bowes and Science Applications International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.