Correlation Between Energy Services and Quanta Services
Can any of the company-specific risk be diversified away by investing in both Energy Services and Quanta Services 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 Energy Services and Quanta Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services and Quanta Services, you can compare the effects of market volatilities on Energy Services and Quanta Services 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 Energy Services with a short position of Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Quanta Services.
Diversification Opportunities for Energy Services and Quanta Services
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and Quanta is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services and Energy Services 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 Energy Services are associated (or correlated) with Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Energy Services i.e., Energy Services and Quanta Services go up and down completely randomly.
Pair Corralation between Energy Services and Quanta Services
Given the investment horizon of 90 days Energy Services is expected to generate 2.21 times more return on investment than Quanta Services. However, Energy Services is 2.21 times more volatile than Quanta Services. It trades about 0.15 of its potential returns per unit of risk. Quanta Services is currently generating about 0.08 per unit of risk. If you would invest 670.00 in Energy Services on August 24, 2024 and sell it today you would earn a total of 836.00 from holding Energy Services or generate 124.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services vs. Quanta Services
Performance |
| Timeline |
| Energy Services |
| Quanta Services |
Energy Services and Quanta Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Quanta Services
The main advantage of trading using opposite Energy Services and Quanta Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Quanta Services 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 Quanta Services will offset losses from the drop in Quanta Services' long position.| Energy Services vs. Bouygues SA | Energy Services vs. NV5 Global | Energy Services vs. Matrix Service Co | Energy Services vs. MYR Group |
| Quanta Services vs. MYR Group | Quanta Services vs. Dycom Industries | Quanta Services vs. EMCOR Group | Quanta Services 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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