Correlation Between AGF Management and Granite Construction
Can any of the company-specific risk be diversified away by investing in both AGF Management 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 AGF Management and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Granite Construction, you can compare the effects of market volatilities on AGF Management 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 AGF Management with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Granite Construction.
Diversification Opportunities for AGF Management and Granite Construction
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGF and Granite is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and AGF Management 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 AGF Management Limited 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 AGF Management i.e., AGF Management and Granite Construction go up and down completely randomly.
Pair Corralation between AGF Management and Granite Construction
Assuming the 90 days horizon AGF Management is expected to generate 1.72 times less return on investment than Granite Construction. But when comparing it to its historical volatility, AGF Management Limited is 1.01 times less risky than Granite Construction. It trades about 0.06 of its potential returns per unit of risk. Granite Construction is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,194 in Granite Construction on September 26, 2024 and sell it today you would earn a total of 5,406 from holding Granite Construction or generate 169.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Granite Construction
Performance |
| Timeline |
| AGF Management |
| Granite Construction |
AGF Management and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Granite Construction
The main advantage of trading using opposite AGF Management and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management 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.| AGF Management vs. Blackstone Group | AGF Management vs. The Bank of | AGF Management vs. Ameriprise Financial | AGF Management vs. State Street |
| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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