Correlation Between Granite Construction and GOODYEAR T
Can any of the company-specific risk be diversified away by investing in both Granite Construction and GOODYEAR T 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 GOODYEAR T into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and GOODYEAR T RUBBER, you can compare the effects of market volatilities on Granite Construction and GOODYEAR T 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 GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and GOODYEAR T.
Diversification Opportunities for Granite Construction and GOODYEAR T
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Granite and GOODYEAR is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of Granite Construction i.e., Granite Construction and GOODYEAR T go up and down completely randomly.
Pair Corralation between Granite Construction and GOODYEAR T
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.74 times more return on investment than GOODYEAR T. However, Granite Construction is 1.36 times less risky than GOODYEAR T. It trades about 0.11 of its potential returns per unit of risk. GOODYEAR T RUBBER is currently generating about 0.01 per unit of risk. If you would invest 3,201 in Granite Construction on September 3, 2024 and sell it today you would earn a total of 6,049 from holding Granite Construction or generate 188.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. GOODYEAR T RUBBER
Performance |
| Timeline |
| Granite Construction |
| GOODYEAR T RUBBER |
Granite Construction and GOODYEAR T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and GOODYEAR T
The main advantage of trading using opposite Granite Construction and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
| GOODYEAR T vs. TOTAL GABON | GOODYEAR T vs. Walgreens Boots Alliance | GOODYEAR T vs. Peak Resources Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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