Correlation Between KBR and Dirtt Environmen
Can any of the company-specific risk be diversified away by investing in both KBR and Dirtt Environmen 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 KBR and Dirtt Environmen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBR Inc and Dirtt Environmen, you can compare the effects of market volatilities on KBR and Dirtt Environmen 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 KBR with a short position of Dirtt Environmen. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBR and Dirtt Environmen.
Diversification Opportunities for KBR and Dirtt Environmen
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KBR and Dirtt is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KBR Inc and Dirtt Environmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirtt Environmen and KBR 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 KBR Inc are associated (or correlated) with Dirtt Environmen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dirtt Environmen has no effect on the direction of KBR i.e., KBR and Dirtt Environmen go up and down completely randomly.
Pair Corralation between KBR and Dirtt Environmen
Considering the 90-day investment horizon KBR Inc is expected to generate 0.22 times more return on investment than Dirtt Environmen. However, KBR Inc is 4.55 times less risky than Dirtt Environmen. It trades about 0.04 of its potential returns per unit of risk. Dirtt Environmen is currently generating about -0.05 per unit of risk. If you would invest 5,051 in KBR Inc on August 27, 2024 and sell it today you would earn a total of 1,092 from holding KBR Inc or generate 21.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 25.71% |
| Values | Daily Returns |
KBR Inc vs. Dirtt Environmen
Performance |
| Timeline |
| KBR Inc |
| Dirtt Environmen |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KBR and Dirtt Environmen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBR and Dirtt Environmen
The main advantage of trading using opposite KBR and Dirtt Environmen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBR position performs unexpectedly, Dirtt Environmen 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 Dirtt Environmen will offset losses from the drop in Dirtt Environmen's long position.The idea behind KBR Inc and Dirtt Environmen 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.| Dirtt Environmen vs. Orion Group Holdings | Dirtt Environmen vs. ENGlobal | Dirtt Environmen vs. Cardno Limited | Dirtt Environmen vs. JNS Holdings Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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