Correlation Between Comfort Systems and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Comfort Systems 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 Comfort Systems and Granite Construction 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 Granite Construction Incorporated, you can compare the effects of market volatilities on Comfort Systems 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 Comfort Systems with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comfort Systems and Granite Construction.
Diversification Opportunities for Comfort Systems and Granite Construction
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Comfort and Granite is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Comfort Systems USA and Granite Construction Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 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 Comfort Systems i.e., Comfort Systems and Granite Construction go up and down completely randomly.
Pair Corralation between Comfort Systems and Granite Construction
Considering the 90-day investment horizon Comfort Systems USA is expected to generate 2.3 times more return on investment than Granite Construction. However, Comfort Systems is 2.3 times more volatile than Granite Construction Incorporated. It trades about 0.24 of its potential returns per unit of risk. Granite Construction Incorporated is currently generating about 0.51 per unit of risk. If you would invest 41,169 in Comfort Systems USA on August 24, 2024 and sell it today you would earn a total of 7,828 from holding Comfort Systems USA or generate 19.01% 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. Granite Construction Incorpora
Performance |
| Timeline |
| Comfort Systems USA |
| Granite Construction |
Comfort Systems and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comfort Systems and Granite Construction
The main advantage of trading using opposite Comfort Systems and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comfort Systems 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.| Comfort Systems vs. MYR Group | Comfort Systems vs. Granite Construction Incorporated | Comfort Systems vs. Dycom Industries | Comfort Systems vs. MasTec Inc |
| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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