Correlation Between Everus Construction and BKV

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

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

Diversification Opportunities for Everus Construction and BKV

0.28

Correlation Coefficient

Everus Construction  BKV

Modest diversification

The 3 months correlation between Everus and BKV is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and Everus Construction 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 Everus Construction Group are associated (or correlated) with BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Everus Construction i.e., Everus Construction and BKV go up and down completely randomly.

Pair Corralation between Everus Construction and BKV

Considering the 90-day investment horizon Everus Construction is expected to generate 3.83 times less return on investment than BKV. In addition to that, Everus Construction is 1.4 times more volatile than BKV Corporation. It trades about 0.03 of its total potential returns per unit of risk. BKV Corporation is currently generating about 0.17 per unit of volatility. If you would invest  2,201  in BKV Corporation on October 6, 2024 and sell it today you would earn a total of  167.00  from holding BKV Corporation or generate 7.59% return on investment over 90 days.

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

Everus Construction Group  vs.  BKV Corp.

Everus Construction

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

BKV Corporation

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everus Construction and BKV

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

The idea behind Everus Construction Group and BKV Corporation 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.