Correlation Between EMCOR and KBR

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

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

Diversification Opportunities for EMCOR and KBR

0.0

Correlation Coefficient

EMCOR  KBR

Pay attention - limited upside

The 3 months correlation between EMCOR and KBR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and EMCOR 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 EMCOR Group 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 EMCOR i.e., EMCOR and KBR go up and down completely randomly.

Pair Corralation between EMCOR and KBR

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.74 times more return on investment than KBR. However, EMCOR Group is 1.36 times less risky than KBR. It trades about 0.32 of its potential returns per unit of risk. KBR Inc is currently generating about -0.05 per unit of risk. If you would invest  35,843  in EMCOR Group on August 31, 2024 and sell it today you would earn a total of  14,952  from holding EMCOR Group or generate 41.72% return on investment over 90 days.

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

EMCOR Group  vs.  KBR Inc

EMCOR Group

Risk-Adjusted Performance

25 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 EMCOR and KBR

The main advantage of trading using opposite EMCOR and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR 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 EMCOR Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.