Correlation Between Argan and Aecom Technology
Can any of the company-specific risk be diversified away by investing in both Argan and Aecom Technology 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 Argan and Aecom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argan Inc and Aecom Technology, you can compare the effects of market volatilities on Argan and Aecom Technology 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 Argan with a short position of Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan and Aecom Technology.
Diversification Opportunities for Argan and Aecom Technology
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Argan and Aecom is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology and Argan 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 Argan Inc are associated (or correlated) with Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of Argan i.e., Argan and Aecom Technology go up and down completely randomly.
Pair Corralation between Argan and Aecom Technology
Considering the 90-day investment horizon Argan Inc is expected to generate 2.34 times more return on investment than Aecom Technology. However, Argan is 2.34 times more volatile than Aecom Technology. It trades about 0.19 of its potential returns per unit of risk. Aecom Technology is currently generating about 0.14 per unit of risk. If you would invest 6,880 in Argan Inc on August 24, 2024 and sell it today you would earn a total of 8,528 from holding Argan Inc or generate 123.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argan Inc vs. Aecom Technology
Performance |
| Timeline |
| Argan Inc |
| Aecom Technology |
Argan and Aecom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argan and Aecom Technology
The main advantage of trading using opposite Argan and Aecom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argan position performs unexpectedly, Aecom Technology 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 Aecom Technology will offset losses from the drop in Aecom Technology's long position.| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
| Aecom Technology vs. Quanta Services | Aecom Technology vs. KBR Inc | Aecom Technology vs. Fluor | Aecom Technology vs. Tetra Tech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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