Correlation Between Topbuild Corp and Argan
Can any of the company-specific risk be diversified away by investing in both Topbuild Corp and Argan 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 Topbuild Corp and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Topbuild Corp and Argan Inc, you can compare the effects of market volatilities on Topbuild Corp and Argan 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 Topbuild Corp with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topbuild Corp and Argan.
Diversification Opportunities for Topbuild Corp and Argan
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Topbuild and Argan is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and Topbuild Corp 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 Topbuild Corp are associated (or correlated) with Argan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan Inc has no effect on the direction of Topbuild Corp i.e., Topbuild Corp and Argan go up and down completely randomly.
Pair Corralation between Topbuild Corp and Argan
Considering the 90-day investment horizon Topbuild Corp is expected to generate 6.04 times less return on investment than Argan. But when comparing it to its historical volatility, Topbuild Corp is 1.27 times less risky than Argan. It trades about 0.03 of its potential returns per unit of risk. Argan Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,596 in Argan Inc on October 21, 2024 and sell it today you would earn a total of 13,193 from holding Argan Inc or generate 287.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Topbuild Corp vs. Argan Inc
Performance |
| Timeline |
| Topbuild Corp |
| Argan Inc |
Topbuild Corp and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Topbuild Corp and Argan
The main advantage of trading using opposite Topbuild Corp and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topbuild Corp position performs unexpectedly, Argan 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 Argan will offset losses from the drop in Argan's long position.| Topbuild Corp vs. Api Group Corp | Topbuild Corp vs. MYR Group | Topbuild Corp vs. Comfort Systems USA | Topbuild Corp vs. Construction Partners |
| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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