Correlation Between Forrester Research and Booz Allen

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

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

Diversification Opportunities for Forrester Research and Booz Allen

-0.81

Correlation Coefficient

Forrester Research  Booz Allen

Pay attention - limited upside

The 3 months correlation between Forrester and Booz is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Forrester Research and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton and Forrester Research 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 Forrester Research are associated (or correlated) with Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of Forrester Research i.e., Forrester Research and Booz Allen go up and down completely randomly.

Pair Corralation between Forrester Research and Booz Allen

Given the investment horizon of 90 days Forrester Research is expected to under-perform the Booz Allen. But the stock apears to be less risky and, when comparing its historical volatility, Forrester Research is 1.31 times less risky than Booz Allen. The stock trades about -0.26 of its potential returns per unit of risk. The Booz Allen Hamilton is currently generating about 0.28 of returns per unit of risk over similar time horizon. 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 Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Forrester Research  vs.  Booz Allen Hamilton

Forrester Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forrester Research has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Forrester Research and Booz Allen

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

The idea behind Forrester Research and Booz Allen Hamilton 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.