Correlation Between Arcosa and Fluor
Can any of the company-specific risk be diversified away by investing in both Arcosa and Fluor 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 Arcosa and Fluor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcosa Inc and Fluor, you can compare the effects of market volatilities on Arcosa and Fluor 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 Arcosa with a short position of Fluor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcosa and Fluor.
Diversification Opportunities for Arcosa and Fluor
Poor diversification
The 3 months correlation between Arcosa and Fluor is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Arcosa Inc and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor and Arcosa 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 Arcosa Inc are associated (or correlated) with Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Arcosa i.e., Arcosa and Fluor go up and down completely randomly.
Pair Corralation between Arcosa and Fluor
Considering the 90-day investment horizon Arcosa is expected to generate 1.18 times less return on investment than Fluor. But when comparing it to its historical volatility, Arcosa Inc is 1.07 times less risky than Fluor. It trades about 0.09 of its potential returns per unit of risk. Fluor is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,221 in Fluor on August 24, 2024 and sell it today you would earn a total of 1,251 from holding Fluor or generate 29.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arcosa Inc vs. Fluor
Performance |
| Timeline |
| Arcosa Inc |
| Fluor |
Arcosa and Fluor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcosa and Fluor
The main advantage of trading using opposite Arcosa and Fluor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcosa position performs unexpectedly, Fluor 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 Fluor will offset losses from the drop in Fluor's long position.| Arcosa vs. Matrix Service Co | Arcosa vs. IES Holdings | Arcosa vs. MYR Group | Arcosa vs. Construction Partners |
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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