Correlation Between Granite Construction and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both Granite Construction and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and NORTHEAST UTILITIES, you can compare the effects of market volatilities on Granite Construction and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and NORTHEAST UTILITIES.
Diversification Opportunities for Granite Construction and NORTHEAST UTILITIES
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and NORTHEAST is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Granite Construction i.e., Granite Construction and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between Granite Construction and NORTHEAST UTILITIES
Assuming the 90 days trading horizon Granite Construction is expected to generate 1.43 times more return on investment than NORTHEAST UTILITIES. However, Granite Construction is 1.43 times more volatile than NORTHEAST UTILITIES. It trades about 0.09 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about -0.02 per unit of risk. If you would invest 3,542 in Granite Construction on October 14, 2024 and sell it today you would earn a total of 4,908 from holding Granite Construction or generate 138.57% 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. NORTHEAST UTILITIES
Performance |
| Timeline |
| Granite Construction |
| NORTHEAST UTILITIES |
Granite Construction and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and NORTHEAST UTILITIES
The main advantage of trading using opposite Granite Construction and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES'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 |
| NORTHEAST UTILITIES vs. Granite Construction | NORTHEAST UTILITIES vs. VIRGIN WINES UK | NORTHEAST UTILITIES vs. ALEFARM BREWING DK 05 | NORTHEAST UTILITIES vs. Hanison Construction Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |