Correlation Between Maximus and KBR
Can any of the company-specific risk be diversified away by investing in both Maximus 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 Maximus and KBR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maximus and KBR Inc, you can compare the effects of market volatilities on Maximus 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 Maximus with a short position of KBR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maximus and KBR.
Diversification Opportunities for Maximus and KBR
Poor diversification
The 3 months correlation between Maximus and KBR is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and Maximus 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 Maximus 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 Maximus i.e., Maximus and KBR go up and down completely randomly.
Pair Corralation between Maximus and KBR
Considering the 90-day investment horizon Maximus is expected to under-perform the KBR. But the stock apears to be less risky and, when comparing its historical volatility, Maximus is 1.38 times less risky than KBR. The stock trades about -0.34 of its potential returns per unit of risk. The KBR Inc is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 6,828 in KBR Inc on August 31, 2024 and sell it today you would lose (710.00) from holding KBR Inc or give up 10.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maximus vs. KBR Inc
Performance |
| Timeline |
| Maximus |
| KBR Inc |
Maximus and KBR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maximus and KBR
The main advantage of trading using opposite Maximus and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maximus 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.| Maximus vs. Network 1 Technologies | Maximus vs. Wilhelmina | Maximus vs. Mader Group Limited | Maximus vs. First Advantage 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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