Correlation Between Dun Bradstreet and Equifax

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Can any of the company-specific risk be diversified away by investing in both Dun Bradstreet and Equifax 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 Dun Bradstreet and Equifax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dun Bradstreet Holdings and Equifax, you can compare the effects of market volatilities on Dun Bradstreet and Equifax 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 Dun Bradstreet with a short position of Equifax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dun Bradstreet and Equifax.

Diversification Opportunities for Dun Bradstreet and Equifax

-0.75
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Dun Bradstreet and Equifax

Considering the 90-day investment horizon Dun Bradstreet Holdings is expected to under-perform the Equifax. In addition to that, Dun Bradstreet is 1.05 times more volatile than Equifax. It trades about -0.13 of its total potential returns per unit of risk. Equifax is currently generating about 0.0 per unit of volatility. If you would invest  26,833  in Equifax on December 29, 2023 and sell it today you would lose (81.00) from holding Equifax or give up 0.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Dun Bradstreet Holdings  vs.  Equifax

 Performance 
       Timeline  
Dun Bradstreet Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Dun Bradstreet Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Equifax 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Equifax are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Equifax may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Dun Bradstreet and Equifax Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dun Bradstreet and Equifax

The main advantage of trading using opposite Dun Bradstreet and Equifax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dun Bradstreet position performs unexpectedly, Equifax 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 Equifax will offset losses from the drop in Equifax's long position.
The idea behind Dun Bradstreet Holdings and Equifax 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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