Correlation Between Korn Ferry and Barrett Business

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

By analyzing existing cross correlation between Korn Ferry and Barrett Business Services, you can compare the effects of market volatilities on Korn Ferry and Barrett Business 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 Korn Ferry with a short position of Barrett Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korn Ferry and Barrett Business.

Diversification Opportunities for Korn Ferry and Barrett Business

0.88

Correlation Coefficient

Korn Ferry  Barrett Business

Very poor diversification

The 3 months correlation between Korn and Barrett is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Korn Ferry and Barrett Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrett Business Services and Korn Ferry 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 Korn Ferry are associated (or correlated) with Barrett Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrett Business Services has no effect on the direction of Korn Ferry i.e., Korn Ferry and Barrett Business go up and down completely randomly.

Pair Corralation between Korn Ferry and Barrett Business

Considering the 90-day investment horizon Korn Ferry is expected to generate 3.14 times less return on investment than Barrett Business. But when comparing it to its historical volatility, Korn Ferry is 1.01 times less risky than Barrett Business. It trades about 0.06 of its potential returns per unit of risk. Barrett Business Services is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,744  in Barrett Business Services on August 30, 2024 and sell it today you would earn a total of  534.00  from holding Barrett Business Services or generate 14.26% return on investment over 90 days.

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

Korn Ferry  vs.  Barrett Business Services

Korn Ferry

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Korn Ferry are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Korn Ferry may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Barrett Business Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrett Business Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Barrett Business demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Korn Ferry and Barrett Business

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

The idea behind Korn Ferry and Barrett Business Services 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.