Correlation Between Argan and Quanta Services
Can any of the company-specific risk be diversified away by investing in both Argan and Quanta Services 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 Quanta Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argan Inc and Quanta Services, you can compare the effects of market volatilities on Argan and Quanta Services 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 Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan and Quanta Services.
Diversification Opportunities for Argan and Quanta Services
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Argan and Quanta is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services 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 Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Argan i.e., Argan and Quanta Services go up and down completely randomly.
Pair Corralation between Argan and Quanta Services
Considering the 90-day investment horizon Argan Inc is expected to generate 1.41 times more return on investment than Quanta Services. However, Argan is 1.41 times more volatile than Quanta Services. It trades about 0.13 of its potential returns per unit of risk. Quanta Services is currently generating about 0.1 per unit of risk. If you would invest 3,333 in Argan Inc on September 2, 2024 and sell it today you would earn a total of 12,261 from holding Argan Inc or generate 367.87% 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. Quanta Services
Performance |
| Timeline |
| Argan Inc |
| Quanta Services |
Argan and Quanta Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argan and Quanta Services
The main advantage of trading using opposite Argan and Quanta Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argan position performs unexpectedly, Quanta Services 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 Quanta Services will offset losses from the drop in Quanta Services' long position.| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
| Quanta Services vs. MYR Group | Quanta Services vs. Dycom Industries | Quanta Services vs. EMCOR Group | Quanta Services vs. Comfort Systems USA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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