Correlation Between Arcadis NV and KBR

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

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

Diversification Opportunities for Arcadis NV and KBR

-0.17

Correlation Coefficient

Arcadis NV  KBR

Good diversification

The 3 months correlation between Arcadis and KBR is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Arcadis NV and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and Arcadis NV 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 Arcadis NV 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 Arcadis NV i.e., Arcadis NV and KBR go up and down completely randomly.

Pair Corralation between Arcadis NV and KBR

Assuming the 90 days horizon Arcadis NV is expected to under-perform the KBR. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arcadis NV is 2.44 times less risky than KBR. The pink sheet trades about -0.21 of its potential returns per unit of risk. The KBR Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  6,705  in KBR Inc on September 1, 2024 and sell it today you would lose (622.00) from holding KBR Inc or give up 9.28% of portfolio value over 90 days.

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

Arcadis NV  vs.  KBR Inc

Arcadis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcadis NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

KBR Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Arcadis NV and KBR

The main advantage of trading using opposite Arcadis NV and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcadis NV 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 Arcadis NV 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.