Correlation Between Reliant Holdings and KBR
Can any of the company-specific risk be diversified away by investing in both Reliant Holdings 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 Reliant Holdings and KBR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliant Holdings and KBR Inc, you can compare the effects of market volatilities on Reliant Holdings 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 Reliant Holdings with a short position of KBR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliant Holdings and KBR.
Diversification Opportunities for Reliant Holdings and KBR
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Reliant and KBR is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Reliant Holdings and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and Reliant Holdings 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 Reliant Holdings 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 Reliant Holdings i.e., Reliant Holdings and KBR go up and down completely randomly.
Pair Corralation between Reliant Holdings and KBR
Given the investment horizon of 90 days Reliant Holdings is expected to generate 8.52 times more return on investment than KBR. However, Reliant Holdings is 8.52 times more volatile than KBR Inc. It trades about 0.02 of its potential returns per unit of risk. KBR Inc is currently generating about -0.1 per unit of risk. If you would invest 10.00 in Reliant Holdings on August 27, 2024 and sell it today you would lose (4.89) from holding Reliant Holdings or give up 48.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliant Holdings vs. KBR Inc
Performance |
| Timeline |
| Reliant Holdings |
| KBR Inc |
Reliant Holdings and KBR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliant Holdings and KBR
The main advantage of trading using opposite Reliant Holdings and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliant Holdings 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.| Reliant Holdings vs. Aecon Group | Reliant Holdings vs. Argan Inc | Reliant Holdings vs. Agrify Corp | Reliant Holdings vs. Cardno Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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