Correlation Between Great Lakes and Topbuild Corp
Can any of the company-specific risk be diversified away by investing in both Great Lakes and Topbuild Corp 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 Great Lakes and Topbuild Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Lakes Dredge and Topbuild Corp, you can compare the effects of market volatilities on Great Lakes and Topbuild Corp 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 Great Lakes with a short position of Topbuild Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Lakes and Topbuild Corp.
Diversification Opportunities for Great Lakes and Topbuild Corp
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Topbuild is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Topbuild Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topbuild Corp and Great Lakes 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 Great Lakes Dredge are associated (or correlated) with Topbuild Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topbuild Corp has no effect on the direction of Great Lakes i.e., Great Lakes and Topbuild Corp go up and down completely randomly.
Pair Corralation between Great Lakes and Topbuild Corp
Given the investment horizon of 90 days Great Lakes is expected to generate 1.23 times less return on investment than Topbuild Corp. But when comparing it to its historical volatility, Great Lakes Dredge is 1.38 times less risky than Topbuild Corp. It trades about 0.16 of its potential returns per unit of risk. Topbuild Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 35,612 in Topbuild Corp on August 30, 2024 and sell it today you would earn a total of 3,183 from holding Topbuild Corp or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Lakes Dredge vs. Topbuild Corp
Performance |
| Timeline |
| Great Lakes Dredge |
| Topbuild Corp |
Great Lakes and Topbuild Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Lakes and Topbuild Corp
The main advantage of trading using opposite Great Lakes and Topbuild Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Lakes position performs unexpectedly, Topbuild Corp 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 Topbuild Corp will offset losses from the drop in Topbuild Corp's long position.| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
| Topbuild Corp vs. Meritage | Topbuild Corp vs. LGI Homes | Topbuild Corp vs. Hovnanian Enterprises | Topbuild Corp vs. Lennar |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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