Correlation Between KBR and Matrix Service

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

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

Diversification Opportunities for KBR and Matrix Service

-0.08

Correlation Coefficient

KBR  Matrix Service

Good diversification

The 3 months correlation between KBR and Matrix is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding KBR Inc and Matrix Service Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Service and KBR 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 KBR Inc are associated (or correlated) with Matrix Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix Service has no effect on the direction of KBR i.e., KBR and Matrix Service go up and down completely randomly.

Pair Corralation between KBR and Matrix Service

Considering the 90-day investment horizon KBR Inc is expected to under-perform the Matrix Service. But the stock apears to be less risky and, when comparing its historical volatility, KBR Inc is 1.04 times less risky than Matrix Service. The stock trades about -0.04 of its potential returns per unit of risk. The Matrix Service Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,153  in Matrix Service Co on August 30, 2024 and sell it today you would earn a total of  177.00  from holding Matrix Service Co or generate 15.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

KBR Inc  vs.  Matrix Service Co

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.

Matrix Service

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Matrix Service showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KBR and Matrix Service

The main advantage of trading using opposite KBR and Matrix Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBR position performs unexpectedly, Matrix Service 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 Matrix Service will offset losses from the drop in Matrix Service's long position.

The idea behind KBR Inc and Matrix Service Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.