Correlation Between Kip McGrath and Bravura Solutions

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

By analyzing existing cross correlation between Kip McGrath Education and Bravura Solutions, you can compare the effects of market volatilities on Kip McGrath and Bravura Solutions 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 Kip McGrath with a short position of Bravura Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kip McGrath and Bravura Solutions.

Diversification Opportunities for Kip McGrath and Bravura Solutions

0.6

Correlation Coefficient

Kip McGrath  Bravura Solutions

Poor diversification

The 3 months correlation between Kip and Bravura is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kip McGrath Education and Bravura Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravura Solutions and Kip McGrath 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 Kip McGrath Education are associated (or correlated) with Bravura Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravura Solutions has no effect on the direction of Kip McGrath i.e., Kip McGrath and Bravura Solutions go up and down completely randomly.

Pair Corralation between Kip McGrath and Bravura Solutions

Assuming the 90 days trading horizon Kip McGrath Education is expected to under-perform the Bravura Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Kip McGrath Education is 1.71 times less risky than Bravura Solutions. The stock trades about -0.4 of its potential returns per unit of risk. The Bravura Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Bravura Solutions on October 8, 2024 and sell it today you would earn a total of  4.00  from holding Bravura Solutions or generate 1.8% return on investment over 90 days.

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

Kip McGrath Education  vs.  Bravura Solutions

Kip McGrath Education

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kip McGrath Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Kip McGrath may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bravura Solutions

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bravura Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bravura Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kip McGrath and Bravura Solutions

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

The idea behind Kip McGrath Education and Bravura Solutions 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .