Correlation Between Granite Construction and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both Granite Construction and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and AIR PRODCHEMICALS, you can compare the effects of market volatilities on Granite Construction and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and AIR PRODCHEMICALS.
Diversification Opportunities for Granite Construction and AIR PRODCHEMICALS
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Granite and AIR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Granite Construction i.e., Granite Construction and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between Granite Construction and AIR PRODCHEMICALS
Assuming the 90 days trading horizon Granite Construction is expected to generate 2.65 times more return on investment than AIR PRODCHEMICALS. However, Granite Construction is 2.65 times more volatile than AIR PRODCHEMICALS. It trades about 0.26 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.44 per unit of risk. If you would invest 7,950 in Granite Construction on September 2, 2024 and sell it today you would earn a total of 1,300 from holding Granite Construction or generate 16.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| Granite Construction |
| AIR PRODCHEMICALS |
Granite Construction and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and AIR PRODCHEMICALS
The main advantage of trading using opposite Granite Construction and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
| AIR PRODCHEMICALS vs. SIVERS SEMICONDUCTORS AB | AIR PRODCHEMICALS vs. Darden Restaurants | AIR PRODCHEMICALS vs. Reliance Steel Aluminum | AIR PRODCHEMICALS vs. Q2M Managementberatung AG |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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