Correlation Between Granite Construction and Metallis Resources
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Metallis Resources 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 Granite Construction and Metallis Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Metallis Resources, you can compare the effects of market volatilities on Granite Construction and Metallis Resources 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 Granite Construction with a short position of Metallis Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Metallis Resources.
Diversification Opportunities for Granite Construction and Metallis Resources
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and Metallis is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and Metallis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallis Resources and Granite Construction 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 Granite Construction are associated (or correlated) with Metallis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallis Resources has no effect on the direction of Granite Construction i.e., Granite Construction and Metallis Resources go up and down completely randomly.
Pair Corralation between Granite Construction and Metallis Resources
Assuming the 90 days trading horizon Granite Construction is expected to generate 3.31 times less return on investment than Metallis Resources. But when comparing it to its historical volatility, Granite Construction is 6.48 times less risky than Metallis Resources. It trades about 0.19 of its potential returns per unit of risk. Metallis Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7.25 in Metallis Resources on September 1, 2024 and sell it today you would earn a total of 6.75 from holding Metallis Resources or generate 93.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
Granite Construction vs. Metallis Resources
Performance |
| Timeline |
| Granite Construction |
| Metallis Resources |
Granite Construction and Metallis Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Metallis Resources
The main advantage of trading using opposite Granite Construction and Metallis Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Metallis Resources 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 Metallis Resources will offset losses from the drop in Metallis Resources' long position.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
| Metallis Resources vs. Charter Communications | Metallis Resources vs. Amkor Technology | Metallis Resources vs. MACOM Technology Solutions | Metallis Resources vs. Computer And Technologies |
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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