Correlation Between Forrester Research and KBR
Can any of the company-specific risk be diversified away by investing in both Forrester Research and KBR 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 KBR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forrester Research and KBR Inc, you can compare the effects of market volatilities on Forrester Research and KBR 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 KBR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forrester Research and KBR.
Diversification Opportunities for Forrester Research and KBR
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Forrester and KBR is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Forrester Research and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc 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 KBR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBR Inc has no effect on the direction of Forrester Research i.e., Forrester Research and KBR go up and down completely randomly.
Pair Corralation between Forrester Research and KBR
Given the investment horizon of 90 days Forrester Research is expected to generate 0.71 times more return on investment than KBR. However, Forrester Research is 1.42 times less risky than KBR. It trades about 0.26 of its potential returns per unit of risk. KBR Inc is currently generating about -0.13 per unit of risk. If you would invest 1,506 in Forrester Research on August 31, 2024 and sell it today you would earn a total of 214.00 from holding Forrester Research or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forrester Research vs. KBR Inc
Performance |
| Timeline |
| Forrester Research |
| KBR Inc |
Forrester Research and KBR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forrester Research and KBR
The main advantage of trading using opposite Forrester Research and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forrester Research position performs unexpectedly, KBR 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 KBR will offset losses from the drop in KBR's long position.| Forrester Research vs. Huron Consulting Group | Forrester Research vs. ICF International | Forrester Research vs. Franklin Covey | Forrester Research vs. FTI Consulting |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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