Correlation Between KBR and Shimmick Common
Can any of the company-specific risk be diversified away by investing in both KBR and Shimmick Common 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 Shimmick Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBR Inc and Shimmick Common, you can compare the effects of market volatilities on KBR and Shimmick Common 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 Shimmick Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBR and Shimmick Common.
Diversification Opportunities for KBR and Shimmick Common
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KBR and Shimmick is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KBR Inc and Shimmick Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimmick Common 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 Shimmick Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimmick Common has no effect on the direction of KBR i.e., KBR and Shimmick Common go up and down completely randomly.
Pair Corralation between KBR and Shimmick Common
Considering the 90-day investment horizon KBR Inc is expected to under-perform the Shimmick Common. But the stock apears to be less risky and, when comparing its historical volatility, KBR Inc is 1.75 times less risky than Shimmick Common. The stock trades about -0.26 of its potential returns per unit of risk. The Shimmick Common is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 216.00 in Shimmick Common on September 12, 2024 and sell it today you would earn a total of 85.00 from holding Shimmick Common or generate 39.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBR Inc vs. Shimmick Common
Performance |
| Timeline |
| KBR Inc |
| Shimmick Common |
KBR and Shimmick Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBR and Shimmick Common
The main advantage of trading using opposite KBR and Shimmick Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBR position performs unexpectedly, Shimmick Common 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 Shimmick Common will offset losses from the drop in Shimmick Common's long position.The idea behind KBR Inc and Shimmick Common 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.| Shimmick Common vs. KBR Inc | Shimmick Common vs. Tetra Tech | Shimmick Common vs. Fluor | Shimmick Common vs. Topbuild 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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