Correlation Between Dycom Industries and Great Lakes
Can any of the company-specific risk be diversified away by investing in both Dycom Industries and Great Lakes 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 Great Lakes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dycom Industries and Great Lakes Dredge, you can compare the effects of market volatilities on Dycom Industries and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycom Industries and Great Lakes.
Diversification Opportunities for Dycom Industries and Great Lakes
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dycom and Great is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of Dycom Industries i.e., Dycom Industries and Great Lakes go up and down completely randomly.
Pair Corralation between Dycom Industries and Great Lakes
Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 1.65 times less return on investment than Great Lakes. In addition to that, Dycom Industries is 1.89 times more volatile than Great Lakes Dredge. It trades about 0.06 of its total potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.19 per unit of volatility. If you would invest 1,169 in Great Lakes Dredge on September 2, 2024 and sell it today you would earn a total of 94.00 from holding Great Lakes Dredge or generate 8.04% 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. Great Lakes Dredge
Performance |
| Timeline |
| Dycom Industries |
| Great Lakes Dredge |
Dycom Industries and Great Lakes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dycom Industries and Great Lakes
The main advantage of trading using opposite Dycom Industries and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dycom Industries position performs unexpectedly, Great Lakes 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 Great Lakes will offset losses from the drop in Great Lakes' long position.| Dycom Industries vs. KBR Inc | Dycom Industries vs. Tetra Tech | Dycom Industries vs. Fluor | Dycom Industries vs. Topbuild Corp |
| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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