Correlation Between Api Group and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both Api Group and Sterling 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 Api Group and Sterling Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Api Group Corp and Sterling Construction, you can compare the effects of market volatilities on Api Group and Sterling 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 Api Group with a short position of Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Api Group and Sterling Construction.
Diversification Opportunities for Api Group and Sterling Construction
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Api and Sterling is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Api Group Corp and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and Api Group 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 Api Group Corp are associated (or correlated) with Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Api Group i.e., Api Group and Sterling Construction go up and down completely randomly.
Pair Corralation between Api Group and Sterling Construction
Considering the 90-day investment horizon Api Group is expected to generate 2.2 times less return on investment than Sterling Construction. But when comparing it to its historical volatility, Api Group Corp is 2.03 times less risky than Sterling Construction. It trades about 0.3 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 15,258 in Sterling Construction on August 27, 2024 and sell it today you would earn a total of 4,393 from holding Sterling Construction or generate 28.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Api Group Corp vs. Sterling Construction
Performance |
| Timeline |
| Api Group Corp |
| Sterling Construction |
Api Group and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Api Group and Sterling Construction
The main advantage of trading using opposite Api Group and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Api Group position performs unexpectedly, Sterling 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| Api Group vs. Topbuild Corp | Api Group vs. MYR Group | Api Group vs. Comfort Systems USA | Api Group vs. Construction Partners |
| Sterling Construction vs. EMCOR Group | Sterling Construction vs. Comfort Systems USA | Sterling Construction vs. Primoris Services | Sterling Construction vs. Granite Construction Incorporated |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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