Correlation Between Booz Allen and Sphere 3D

Can any of the company-specific risk be diversified away by investing in both Booz Allen and Sphere 3D 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 Booz Allen and Sphere 3D into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Booz Allen Hamilton and Sphere 3D Corp, you can compare the effects of market volatilities on Booz Allen and Sphere 3D 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 Booz Allen with a short position of Sphere 3D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and Sphere 3D.

Diversification Opportunities for Booz Allen and Sphere 3D

0.23

Correlation Coefficient

Booz Allen  Sphere 3D

Modest diversification

The 3 months correlation between Booz and Sphere is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Sphere 3D Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere 3D Corp and Booz Allen 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 Booz Allen Hamilton are associated (or correlated) with Sphere 3D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere 3D Corp has no effect on the direction of Booz Allen i.e., Booz Allen and Sphere 3D go up and down completely randomly.

Pair Corralation between Booz Allen and Sphere 3D

Considering the 90-day investment horizon Booz Allen Hamilton is expected to generate 0.36 times more return on investment than Sphere 3D. However, Booz Allen Hamilton is 2.8 times less risky than Sphere 3D. It trades about 0.02 of its potential returns per unit of risk. Sphere 3D Corp is currently generating about -0.02 per unit of risk. If you would invest  15,667  in Booz Allen Hamilton on June 24, 2024 and sell it today you would earn a total of  122.00  from holding Booz Allen Hamilton or generate 0.78% return on investment over 90 days.

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

Booz Allen Hamilton  vs.  Sphere 3D Corp

Booz Allen Hamilton

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Booz Allen Hamilton are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Booz Allen is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Sphere 3D Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere 3D Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Booz Allen and Sphere 3D

The main advantage of trading using opposite Booz Allen and Sphere 3D positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booz Allen position performs unexpectedly, Sphere 3D 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 Sphere 3D will offset losses from the drop in Sphere 3D's long position.

The idea behind Booz Allen Hamilton and Sphere 3D Corp 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.