Correlation Between Granite Construction and COVIVIO HOTELS
Can any of the company-specific risk be diversified away by investing in both Granite Construction and COVIVIO HOTELS 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 COVIVIO HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and COVIVIO HOTELS INH, you can compare the effects of market volatilities on Granite Construction and COVIVIO HOTELS 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 COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and COVIVIO HOTELS.
Diversification Opportunities for Granite Construction and COVIVIO HOTELS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Granite and COVIVIO is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH 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 COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of Granite Construction i.e., Granite Construction and COVIVIO HOTELS go up and down completely randomly.
Pair Corralation between Granite Construction and COVIVIO HOTELS
Assuming the 90 days trading horizon Granite Construction is expected to under-perform the COVIVIO HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, Granite Construction is 2.17 times less risky than COVIVIO HOTELS. The stock trades about -0.29 of its potential returns per unit of risk. The COVIVIO HOTELS INH is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,860 in COVIVIO HOTELS INH on October 14, 2024 and sell it today you would earn a total of 130.00 from holding COVIVIO HOTELS INH or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. COVIVIO HOTELS INH
Performance |
| Timeline |
| Granite Construction |
| COVIVIO HOTELS INH |
Granite Construction and COVIVIO HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and COVIVIO HOTELS
The main advantage of trading using opposite Granite Construction and COVIVIO HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, COVIVIO HOTELS 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 COVIVIO HOTELS will offset losses from the drop in COVIVIO HOTELS's long position.| Granite Construction vs. SQUIRREL MEDIA SA | Granite Construction vs. TYSON FOODS A | Granite Construction vs. Flutter Entertainment PLC | Granite Construction vs. CN MODERN DAIRY |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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