Correlation Between Tutor Perini and KBR

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

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

Diversification Opportunities for Tutor Perini and KBR

0.24

Correlation Coefficient

Tutor Perini  KBR

Modest diversification

The 3 months correlation between Tutor and KBR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Tutor Perini and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and Tutor Perini 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 Tutor Perini 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 Tutor Perini i.e., Tutor Perini and KBR go up and down completely randomly.

Pair Corralation between Tutor Perini and KBR

Considering the 90-day investment horizon Tutor Perini is expected to generate 1.33 times more return on investment than KBR. However, Tutor Perini is 1.33 times more volatile than KBR Inc. It trades about 0.05 of its potential returns per unit of risk. KBR Inc is currently generating about -0.13 per unit of risk. If you would invest  2,654  in Tutor Perini on August 31, 2024 and sell it today you would earn a total of  71.00  from holding Tutor Perini or generate 2.68% return on investment over 90 days.

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

Tutor Perini  vs.  KBR Inc

Tutor Perini

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tutor Perini are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tutor Perini 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 Tutor Perini and KBR

The main advantage of trading using opposite Tutor Perini and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tutor Perini 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 Tutor Perini 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.