Correlation Between Granite Construction and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both Granite Construction and LANDSEA HOMES 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 LANDSEA HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and LANDSEA HOMES P, you can compare the effects of market volatilities on Granite Construction and LANDSEA HOMES 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 LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and LANDSEA HOMES.
Diversification Opportunities for Granite Construction and LANDSEA HOMES
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and LANDSEA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P 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 LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of Granite Construction i.e., Granite Construction and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between Granite Construction and LANDSEA HOMES
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.67 times more return on investment than LANDSEA HOMES. However, Granite Construction is 1.49 times less risky than LANDSEA HOMES. It trades about 0.11 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about 0.06 per unit of risk. If you would invest 3,240 in Granite Construction on September 12, 2024 and sell it today you would earn a total of 5,860 from holding Granite Construction or generate 180.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. LANDSEA HOMES P
Performance |
| Timeline |
| Granite Construction |
| LANDSEA HOMES P |
Granite Construction and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and LANDSEA HOMES
The main advantage of trading using opposite Granite Construction and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, LANDSEA HOMES 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 LANDSEA HOMES will offset losses from the drop in LANDSEA HOMES's long position.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
| LANDSEA HOMES vs. Superior Plus Corp | LANDSEA HOMES vs. SIVERS SEMICONDUCTORS AB | LANDSEA HOMES vs. NorAm Drilling AS | LANDSEA HOMES vs. BANK HANDLOWY |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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