Correlation Between Great Lakes and Tetra Tech
Can any of the company-specific risk be diversified away by investing in both Great Lakes and Tetra Tech 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 Tetra Tech 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 Tetra Tech, you can compare the effects of market volatilities on Great Lakes and Tetra Tech 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 Tetra Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Lakes and Tetra Tech.
Diversification Opportunities for Great Lakes and Tetra Tech
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Tetra is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Tetra Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetra Tech 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 Tetra Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetra Tech has no effect on the direction of Great Lakes i.e., Great Lakes and Tetra Tech go up and down completely randomly.
Pair Corralation between Great Lakes and Tetra Tech
Given the investment horizon of 90 days Great Lakes Dredge is expected to generate 0.6 times more return on investment than Tetra Tech. However, Great Lakes Dredge is 1.68 times less risky than Tetra Tech. It trades about 0.2 of its potential returns per unit of risk. Tetra Tech is currently generating about -0.23 per unit of risk. If you would invest 1,147 in Great Lakes Dredge on August 31, 2024 and sell it today you would earn a total of 105.00 from holding Great Lakes Dredge or generate 9.15% 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. Tetra Tech
Performance |
| Timeline |
| Great Lakes Dredge |
| Tetra Tech |
Great Lakes and Tetra Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Lakes and Tetra Tech
The main advantage of trading using opposite Great Lakes and Tetra Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Lakes position performs unexpectedly, Tetra Tech 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 Tetra Tech will offset losses from the drop in Tetra Tech's long position.| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
| Tetra Tech vs. Jacobs Solutions | Tetra Tech vs. KBR Inc | Tetra Tech vs. Fluor | Tetra Tech vs. Topbuild Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |