Correlation Between Booz Allen and Enlivex Therapeutics

Can any of the company-specific risk be diversified away by investing in both Booz Allen and Enlivex Therapeutics 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 Enlivex Therapeutics 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 Enlivex Therapeutics, you can compare the effects of market volatilities on Booz Allen and Enlivex Therapeutics 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 Enlivex Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booz Allen and Enlivex Therapeutics.

Diversification Opportunities for Booz Allen and Enlivex Therapeutics

0.42

Correlation Coefficient

Booz Allen  Enlivex Therapeutics

Very weak diversification

The 3 months correlation between Booz and Enlivex is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Booz Allen Hamilton and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics 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 Enlivex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlivex Therapeutics has no effect on the direction of Booz Allen i.e., Booz Allen and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Booz Allen and Enlivex Therapeutics

Considering the 90-day investment horizon Booz Allen Hamilton is expected to generate 0.57 times more return on investment than Enlivex Therapeutics. However, Booz Allen Hamilton is 1.77 times less risky than Enlivex Therapeutics. It trades about 0.28 of its potential returns per unit of risk. Enlivex Therapeutics is currently generating about -0.18 per unit of risk. If you would invest  16,126  in Booz Allen Hamilton on August 7, 2024 and sell it today you would earn a total of  2,136  from holding Booz Allen Hamilton or generate 13.25% return on investment over 90 days.

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

Booz Allen Hamilton  vs.  Enlivex Therapeutics

Booz Allen Hamilton

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Booz Allen Hamilton are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Booz Allen demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Enlivex Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enlivex Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Enlivex Therapeutics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Booz Allen and Enlivex Therapeutics

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

The idea behind Booz Allen Hamilton and Enlivex Therapeutics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.