Correlation Between Topbuild Corp and KBR

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

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

Diversification Opportunities for Topbuild Corp and KBR

0.17

Correlation Coefficient

Topbuild Corp  KBR

Average diversification

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

Pair Corralation between Topbuild Corp and KBR

Considering the 90-day investment horizon Topbuild Corp is expected to generate 0.86 times more return on investment than KBR. However, Topbuild Corp is 1.17 times less risky than KBR. It trades about 0.17 of its potential returns per unit of risk. KBR Inc is currently generating about -0.12 per unit of risk. If you would invest  35,373  in Topbuild Corp on September 2, 2024 and sell it today you would earn a total of  3,691  from holding Topbuild Corp or generate 10.43% return on investment over 90 days.

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

Topbuild Corp  vs.  KBR Inc

Topbuild Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Topbuild Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Topbuild Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Topbuild Corp and KBR

The main advantage of trading using opposite Topbuild Corp and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topbuild Corp 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 Topbuild Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.