Correlation Between Verisk Analytics and Science Applications

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

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

Diversification Opportunities for Verisk Analytics and Science Applications

0.29

Correlation Coefficient

Verisk Analytics  Science Applications

Modest diversification

The 3 months correlation between Verisk and Science is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and Verisk Analytics 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 Verisk Analytics 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 Verisk Analytics i.e., Verisk Analytics and Science Applications go up and down completely randomly.

Pair Corralation between Verisk Analytics and Science Applications

Given the investment horizon of 90 days Verisk Analytics is expected to under-perform the Science Applications. But the stock apears to be less risky and, when comparing its historical volatility, Verisk Analytics is 1.48 times less risky than Science Applications. The stock trades about -0.31 of its potential returns per unit of risk. The Science Applications International is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  12,663  in Science Applications International on January 20, 2024 and sell it today you would lose (345.00) from holding Science Applications International or give up 2.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Verisk Analytics  vs.  Science Applications Internati

Verisk Analytics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verisk Analytics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Verisk Analytics and Science Applications

The main advantage of trading using opposite Verisk Analytics and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verisk Analytics 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 Verisk Analytics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.