Correlation Between Mistras and KBR

Can any of the company-specific risk be diversified away by investing in both Mistras 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 Mistras and KBR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mistras Group and KBR Inc, you can compare the effects of market volatilities on Mistras 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 Mistras with a short position of KBR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mistras and KBR.

Diversification Opportunities for Mistras and KBR

0.16

Correlation Coefficient

Mistras  KBR

Average diversification

The 3 months correlation between Mistras and KBR is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and Mistras 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 Mistras Group 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 Mistras i.e., Mistras and KBR go up and down completely randomly.

Pair Corralation between Mistras and KBR

Allowing for the 90-day total investment horizon Mistras Group is expected to under-perform the KBR. In addition to that, Mistras is 2.95 times more volatile than KBR Inc. It trades about -0.05 of its total potential returns per unit of risk. KBR Inc is currently generating about 0.13 per unit of volatility. If you would invest  6,438  in KBR Inc on February 24, 2024 and sell it today you would earn a total of  157.00  from holding KBR Inc or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mistras Group  vs.  KBR Inc

Mistras Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mistras Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Mistras is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KBR Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBR Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental drivers, KBR may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Mistras and KBR

The main advantage of trading using opposite Mistras and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mistras 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.

The idea behind Mistras Group and KBR Inc 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.