Correlation Between Comfort Systems and Great Lakes
Can any of the company-specific risk be diversified away by investing in both Comfort Systems 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 Comfort Systems and Great Lakes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comfort Systems USA and Great Lakes Dredge, you can compare the effects of market volatilities on Comfort Systems 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 Comfort Systems with a short position of Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comfort Systems and Great Lakes.
Diversification Opportunities for Comfort Systems and Great Lakes
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Comfort and Great is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Comfort Systems USA 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 Comfort Systems 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 Comfort Systems USA 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 Comfort Systems i.e., Comfort Systems and Great Lakes go up and down completely randomly.
Pair Corralation between Comfort Systems and Great Lakes
Considering the 90-day investment horizon Comfort Systems USA is expected to generate 0.86 times more return on investment than Great Lakes. However, Comfort Systems USA is 1.16 times less risky than Great Lakes. It trades about 0.12 of its potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.05 per unit of risk. If you would invest 12,064 in Comfort Systems USA on August 27, 2024 and sell it today you would earn a total of 37,042 from holding Comfort Systems USA or generate 307.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comfort Systems USA vs. Great Lakes Dredge
Performance |
| Timeline |
| Comfort Systems USA |
| Great Lakes Dredge |
Comfort Systems and Great Lakes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comfort Systems and Great Lakes
The main advantage of trading using opposite Comfort Systems and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comfort Systems 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.| Comfort Systems vs. MYR Group | Comfort Systems vs. Granite Construction Incorporated | Comfort Systems vs. Dycom Industries | Comfort Systems vs. MasTec Inc |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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