Correlation Between Kelly Services and Barrett Business

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

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

Diversification Opportunities for Kelly Services and Barrett Business

0.04

Correlation Coefficient

Kelly Services  Barrett Business

Significant diversification

The 3 months correlation between Kelly and Barrett is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kelly Services B 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 Kelly Services 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 Kelly Services B 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 Kelly Services i.e., Kelly Services and Barrett Business go up and down completely randomly.

Pair Corralation between Kelly Services and Barrett Business

Assuming the 90 days horizon Kelly Services B is expected to generate 2.34 times more return on investment than Barrett Business. However, Kelly Services is 2.34 times more volatile than Barrett Business Services. It trades about 0.0 of its potential returns per unit of risk. Barrett Business Services is currently generating about -0.08 per unit of risk. If you would invest  1,459  in Kelly Services B on November 28, 2024 and sell it today you would lose (21.00) from holding Kelly Services B or give up 1.44% of portfolio value over 90 days.

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

Kelly Services B  vs.  Barrett Business Services

Kelly Services B

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kelly Services B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kelly Services is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Barrett Business Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barrett Business Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Barrett Business is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kelly Services and Barrett Business

The main advantage of trading using opposite Kelly Services and Barrett Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kelly Services 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 Kelly Services B 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.