Correlation Between Granite Construction and LANSON BCC
Can any of the company-specific risk be diversified away by investing in both Granite Construction and LANSON BCC 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 LANSON BCC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and LANSON BCC INH EO, you can compare the effects of market volatilities on Granite Construction and LANSON BCC 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 LANSON BCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and LANSON BCC.
Diversification Opportunities for Granite Construction and LANSON BCC
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and LANSON is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and LANSON BCC INH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANSON BCC 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 LANSON BCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANSON BCC INH has no effect on the direction of Granite Construction i.e., Granite Construction and LANSON BCC go up and down completely randomly.
Pair Corralation between Granite Construction and LANSON BCC
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.6 times more return on investment than LANSON BCC. However, Granite Construction is 1.66 times less risky than LANSON BCC. It trades about 0.05 of its potential returns per unit of risk. LANSON BCC INH EO is currently generating about -0.2 per unit of risk. If you would invest 9,150 in Granite Construction on September 13, 2024 and sell it today you would earn a total of 100.00 from holding Granite Construction or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. LANSON BCC INH EO
Performance |
| Timeline |
| Granite Construction |
| LANSON BCC INH |
Granite Construction and LANSON BCC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and LANSON BCC
The main advantage of trading using opposite Granite Construction and LANSON BCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, LANSON BCC 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 LANSON BCC will offset losses from the drop in LANSON BCC's long position.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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