Correlation Between Spirent Communications and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Granite 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 Spirent Communications and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Granite Construction, you can compare the effects of market volatilities on Spirent Communications and Granite 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 Spirent Communications with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Granite Construction.
Diversification Opportunities for Spirent Communications and Granite Construction
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spirent and Granite is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Spirent Communications i.e., Spirent Communications and Granite Construction go up and down completely randomly.
Pair Corralation between Spirent Communications and Granite Construction
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the Granite Construction. In addition to that, Spirent Communications is 2.86 times more volatile than Granite Construction. It trades about -0.1 of its total potential returns per unit of risk. Granite Construction is currently generating about 0.11 per unit of volatility. If you would invest 8,637 in Granite Construction on October 26, 2024 and sell it today you would earn a total of 213.00 from holding Granite Construction or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Granite Construction
Performance |
| Timeline |
| Spirent Communications |
| Granite Construction |
Spirent Communications and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Granite Construction
The main advantage of trading using opposite Spirent Communications and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Granite 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| Spirent Communications vs. United Utilities Group | Spirent Communications vs. SBM OFFSHORE | Spirent Communications vs. Algonquin Power Utilities | Spirent Communications vs. UNIQA INSURANCE GR |
| Granite Construction vs. Virtus Investment Partners | Granite Construction vs. CHRYSALIS INVESTMENTS LTD | Granite Construction vs. CDL INVESTMENT | Granite Construction vs. IMAGIN MEDICAL INC |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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