Correlation Between Granite Construction and Agrify Corp
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Agrify Corp 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 Agrify Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction Incorporated and Agrify Corp, you can compare the effects of market volatilities on Granite Construction and Agrify Corp 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 Agrify Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Agrify Corp.
Diversification Opportunities for Granite Construction and Agrify Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and Agrify is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Agrify Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrify Corp 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 Incorporated are associated (or correlated) with Agrify Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrify Corp has no effect on the direction of Granite Construction i.e., Granite Construction and Agrify Corp go up and down completely randomly.
Pair Corralation between Granite Construction and Agrify Corp
Considering the 90-day investment horizon Granite Construction is expected to generate 1.15 times less return on investment than Agrify Corp. But when comparing it to its historical volatility, Granite Construction Incorporated is 6.52 times less risky than Agrify Corp. It trades about 0.13 of its potential returns per unit of risk. Agrify Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 29,550 in Agrify Corp on August 24, 2024 and sell it today you would lose (24,788) from holding Agrify Corp or give up 83.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Agrify Corp
Performance |
| Timeline |
| Granite Construction |
| Agrify Corp |
Granite Construction and Agrify Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Agrify Corp
The main advantage of trading using opposite Granite Construction and Agrify Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Agrify Corp 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 Agrify Corp will offset losses from the drop in Agrify Corp's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Agrify Corp vs. MYR Group | Agrify Corp vs. Granite Construction Incorporated | Agrify Corp vs. Construction Partners | Agrify Corp vs. Great Lakes Dredge |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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