Correlation Between Dycom Industries and Argan
Can any of the company-specific risk be diversified away by investing in both Dycom Industries 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 Dycom Industries and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dycom Industries and Argan Inc, you can compare the effects of market volatilities on Dycom Industries 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 Dycom Industries with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycom Industries and Argan.
Diversification Opportunities for Dycom Industries and Argan
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dycom and Argan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and Dycom Industries 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 Dycom Industries 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 Dycom Industries i.e., Dycom Industries and Argan go up and down completely randomly.
Pair Corralation between Dycom Industries and Argan
Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 2.14 times less return on investment than Argan. But when comparing it to its historical volatility, Dycom Industries is 1.12 times less risky than Argan. It trades about 0.07 of its potential returns per unit of risk. Argan Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,537 in Argan Inc on August 28, 2024 and sell it today you would earn a total of 12,165 from holding Argan Inc or generate 343.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dycom Industries vs. Argan Inc
Performance |
| Timeline |
| Dycom Industries |
| Argan Inc |
Dycom Industries and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dycom Industries and Argan
The main advantage of trading using opposite Dycom Industries and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dycom Industries 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.| Dycom Industries vs. EMCOR Group | Dycom Industries vs. MYR Group | Dycom Industries vs. Topbuild Corp | Dycom Industries vs. Api Group Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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