Correlation Between Argan and Reliant Holdings
Can any of the company-specific risk be diversified away by investing in both Argan and Reliant Holdings 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 Reliant Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argan Inc and Reliant Holdings, you can compare the effects of market volatilities on Argan and Reliant Holdings 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 Reliant Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan and Reliant Holdings.
Diversification Opportunities for Argan and Reliant Holdings
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Argan and Reliant is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and Reliant Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliant Holdings 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 Reliant Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliant Holdings has no effect on the direction of Argan i.e., Argan and Reliant Holdings go up and down completely randomly.
Pair Corralation between Argan and Reliant Holdings
Considering the 90-day investment horizon Argan is expected to generate 3.63 times less return on investment than Reliant Holdings. But when comparing it to its historical volatility, Argan Inc is 7.21 times less risky than Reliant Holdings. It trades about 0.29 of its potential returns per unit of risk. Reliant Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4.25 in Reliant Holdings on August 31, 2024 and sell it today you would earn a total of 3.75 from holding Reliant Holdings or generate 88.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argan Inc vs. Reliant Holdings
Performance |
| Timeline |
| Argan Inc |
| Reliant Holdings |
Argan and Reliant Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argan and Reliant Holdings
The main advantage of trading using opposite Argan and Reliant Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argan position performs unexpectedly, Reliant Holdings 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 Reliant Holdings will offset losses from the drop in Reliant Holdings' long position.| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
| Reliant Holdings vs. Aecon Group | Reliant Holdings vs. Argan Inc | Reliant Holdings vs. Agrify Corp | Reliant Holdings vs. Cardno Limited |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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