Correlation Between Williams Industrial and KBR

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

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

Diversification Opportunities for Williams Industrial and KBR

0.85

Correlation Coefficient

Williams Industrial  KBR

Very poor diversification

The 3 months correlation between Williams and KBR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Williams Industrial Services and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and Williams Industrial 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 Williams Industrial Services 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 Williams Industrial i.e., Williams Industrial and KBR go up and down completely randomly.

Pair Corralation between Williams Industrial and KBR

If you would invest  36.00  in Williams Industrial Services on October 27, 2024 and sell it today you would earn a total of  0.00  from holding Williams Industrial Services or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	5.26%
Values	Daily Returns

Williams Industrial Services  vs.  KBR Inc

Williams Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Williams Industrial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Williams Industrial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 sluggish performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Williams Industrial and KBR

The main advantage of trading using opposite Williams Industrial and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Williams Industrial 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 Williams Industrial Services 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.