Correlation Between Granite Construction and MARKET VECTR
Can any of the company-specific risk be diversified away by investing in both Granite Construction and MARKET VECTR 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 MARKET VECTR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and MARKET VECTR RETAIL, you can compare the effects of market volatilities on Granite Construction and MARKET VECTR 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 MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and MARKET VECTR.
Diversification Opportunities for Granite Construction and MARKET VECTR
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Granite and MARKET is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of Granite Construction i.e., Granite Construction and MARKET VECTR go up and down completely randomly.
Pair Corralation between Granite Construction and MARKET VECTR
Assuming the 90 days trading horizon Granite Construction is expected to generate 2.46 times more return on investment than MARKET VECTR. However, Granite Construction is 2.46 times more volatile than MARKET VECTR RETAIL. It trades about 0.1 of its potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about 0.09 per unit of risk. If you would invest 3,718 in Granite Construction on October 20, 2024 and sell it today you would earn a total of 5,232 from holding Granite Construction or generate 140.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
Granite Construction vs. MARKET VECTR RETAIL
Performance |
| Timeline |
| Granite Construction |
| MARKET VECTR RETAIL |
Granite Construction and MARKET VECTR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and MARKET VECTR
The main advantage of trading using opposite Granite Construction and MARKET VECTR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, MARKET VECTR 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 MARKET VECTR will offset losses from the drop in MARKET VECTR's long position.| Granite Construction vs. COMBA TELECOM SYST | Granite Construction vs. CITIC Telecom International | Granite Construction vs. Charter Communications | Granite Construction vs. Citic Telecom International |
| MARKET VECTR vs. Electronic Arts | MARKET VECTR vs. ELECTRONIC ARTS | MARKET VECTR vs. Japan Post Insurance | MARKET VECTR vs. Direct Line Insurance |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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