Correlation Between Granite Construction and Alliance Resource
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Alliance Resource 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 Alliance Resource 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 Alliance Resource Partners, you can compare the effects of market volatilities on Granite Construction and Alliance Resource 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 Alliance Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Alliance Resource.
Diversification Opportunities for Granite Construction and Alliance Resource
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Granite and Alliance is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Alliance Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Resource 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 Alliance Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Resource has no effect on the direction of Granite Construction i.e., Granite Construction and Alliance Resource go up and down completely randomly.
Pair Corralation between Granite Construction and Alliance Resource
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.82 times more return on investment than Alliance Resource. However, Granite Construction Incorporated is 1.22 times less risky than Alliance Resource. It trades about 0.57 of its potential returns per unit of risk. Alliance Resource Partners is currently generating about 0.29 per unit of risk. If you would invest 8,206 in Granite Construction Incorporated on August 31, 2024 and sell it today you would earn a total of 1,663 from holding Granite Construction Incorporated or generate 20.27% 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 Incorpora vs. Alliance Resource Partners
Performance |
| Timeline |
| Granite Construction |
| Alliance Resource |
Granite Construction and Alliance Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Alliance Resource
The main advantage of trading using opposite Granite Construction and Alliance Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Alliance Resource 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 Alliance Resource will offset losses from the drop in Alliance Resource's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource vs. NACCO Industries |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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