Correlation Between Corporate Travel and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Corporate Travel and Granite Construction 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 Corporate Travel and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and Granite Construction, you can compare the effects of market volatilities on Corporate Travel and Granite Construction 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 Corporate Travel with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Granite Construction.
Diversification Opportunities for Corporate Travel and Granite Construction
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Corporate and Granite is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Corporate Travel i.e., Corporate Travel and Granite Construction go up and down completely randomly.
Pair Corralation between Corporate Travel and Granite Construction
Assuming the 90 days trading horizon Corporate Travel Management is expected to under-perform the Granite Construction. In addition to that, Corporate Travel is 2.39 times more volatile than Granite Construction. It trades about -0.21 of its total potential returns per unit of risk. Granite Construction is currently generating about -0.29 per unit of volatility. If you would invest 8,886 in Granite Construction on October 14, 2024 and sell it today you would lose (436.00) from holding Granite Construction or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Travel Management vs. Granite Construction
Performance |
| Timeline |
| Corporate Travel Man |
| Granite Construction |
Corporate Travel and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Travel and Granite Construction
The main advantage of trading using opposite Corporate Travel and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| Corporate Travel vs. Virtus Investment Partners | Corporate Travel vs. MEDCAW INVESTMENTS LS 01 | Corporate Travel vs. GREENX METALS LTD | Corporate Travel vs. Nippon Light Metal |
| Granite Construction vs. Lendlease Group | Granite Construction vs. Mobilezone Holding AG | Granite Construction vs. Geely Automobile Holdings | Granite Construction vs. OPKO HEALTH |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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