Correlation Between SMX Public and KBR
Can any of the company-specific risk be diversified away by investing in both SMX Public 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 SMX Public and KBR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMX Public Limited and KBR Inc, you can compare the effects of market volatilities on SMX Public 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 SMX Public with a short position of KBR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMX Public and KBR.
Diversification Opportunities for SMX Public and KBR
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMX and KBR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and SMX Public 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 SMX Public Limited 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 SMX Public i.e., SMX Public and KBR go up and down completely randomly.
Pair Corralation between SMX Public and KBR
Assuming the 90 days horizon SMX Public Limited is expected to generate 28.14 times more return on investment than KBR. However, SMX Public is 28.14 times more volatile than KBR Inc. It trades about 0.21 of its potential returns per unit of risk. KBR Inc is currently generating about -0.14 per unit of risk. If you would invest 1.01 in SMX Public Limited on November 1, 2024 and sell it today you would earn a total of 1.80 from holding SMX Public Limited or generate 178.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
SMX Public Limited vs. KBR Inc
Performance |
| Timeline |
| SMX Public Limited |
| KBR Inc |
SMX Public and KBR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMX Public and KBR
The main advantage of trading using opposite SMX Public and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMX Public 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.| SMX Public vs. Mattel Inc | SMX Public vs. VF Corporation | SMX Public vs. Tandy Leather Factory | SMX Public vs. Hollywood Intermediate |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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