Correlation Between KBR and Great Lakes
Can any of the company-specific risk be diversified away by investing in both KBR and Great Lakes 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 Great Lakes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBR Inc and Great Lakes Dredge, you can compare the effects of market volatilities on KBR and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBR and Great Lakes.
Diversification Opportunities for KBR and Great Lakes
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KBR and Great is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding KBR Inc and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of KBR i.e., KBR and Great Lakes go up and down completely randomly.
Pair Corralation between KBR and Great Lakes
Considering the 90-day investment horizon KBR is expected to generate 5.31 times less return on investment than Great Lakes. But when comparing it to its historical volatility, KBR Inc is 1.86 times less risky than Great Lakes. It trades about 0.02 of its potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 651.00 in Great Lakes Dredge on November 2, 2024 and sell it today you would earn a total of 464.00 from holding Great Lakes Dredge or generate 71.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBR Inc vs. Great Lakes Dredge
Performance |
| Timeline |
| KBR Inc |
| Great Lakes Dredge |
KBR and Great Lakes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBR and Great Lakes
The main advantage of trading using opposite KBR and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBR position performs unexpectedly, Great Lakes 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 Great Lakes will offset losses from the drop in Great Lakes' long position.The idea behind KBR Inc and Great Lakes Dredge 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.| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |