Correlation Between Canadian Utilities and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities 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 Canadian Utilities and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and Granite Construction, you can compare the effects of market volatilities on Canadian Utilities 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 Canadian Utilities with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Granite Construction.
Diversification Opportunities for Canadian Utilities and Granite Construction
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and Granite is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and Canadian Utilities 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 Canadian Utilities Limited 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 Canadian Utilities i.e., Canadian Utilities and Granite Construction go up and down completely randomly.
Pair Corralation between Canadian Utilities and Granite Construction
Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the Granite Construction. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 2.42 times less risky than Granite Construction. The stock trades about -0.29 of its potential returns per unit of risk. The Granite Construction is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 8,500 in Granite Construction on November 3, 2024 and sell it today you would lose (50.00) from holding Granite Construction or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Granite Construction
Performance |
| Timeline |
| Canadian Utilities |
| Granite Construction |
Canadian Utilities and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Granite Construction
The main advantage of trading using opposite Canadian Utilities and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities 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.| Canadian Utilities vs. SEKISUI CHEMICAL | Canadian Utilities vs. AIR PRODCHEMICALS | Canadian Utilities vs. Silicon Motion Technology | Canadian Utilities vs. TRI CHEMICAL LABORATINC |
| Granite Construction vs. Easy Software AG | Granite Construction vs. Magic Software Enterprises | Granite Construction vs. Take Two Interactive Software | Granite Construction vs. Mobilezone Holding AG |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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