Correlation Between Aqua America and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Aqua America 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 Aqua America and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua America and Granite Construction, you can compare the effects of market volatilities on Aqua America 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 Aqua America with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua America and Granite Construction.
Diversification Opportunities for Aqua America and Granite Construction
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aqua and Granite is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aqua America and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and Aqua America 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 Aqua America 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 Aqua America i.e., Aqua America and Granite Construction go up and down completely randomly.
Pair Corralation between Aqua America and Granite Construction
Assuming the 90 days trading horizon Aqua America is expected to under-perform the Granite Construction. But the stock apears to be less risky and, when comparing its historical volatility, Aqua America is 1.11 times less risky than Granite Construction. The stock trades about -0.24 of its potential returns per unit of risk. The Granite Construction is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 8,637 in Granite Construction on October 25, 2024 and sell it today you would earn a total of 413.00 from holding Granite Construction or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqua America vs. Granite Construction
Performance |
| Timeline |
| Aqua America |
| Granite Construction |
Aqua America and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua America and Granite Construction
The main advantage of trading using opposite Aqua America and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua America 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.| Aqua America vs. Strategic Education | Aqua America vs. EEDUCATION ALBERT AB | Aqua America vs. DeVry Education Group | Aqua America vs. STRAYER EDUCATION |
| Granite Construction vs. Lery Seafood Group | Granite Construction vs. INDOFOOD AGRI RES | Granite Construction vs. Japan Tobacco | Granite Construction vs. COFCO Joycome Foods |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |