Correlation Between Granite Construction and Austal
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Austal 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 Austal 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 Austal Limited, you can compare the effects of market volatilities on Granite Construction and Austal 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 Austal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Austal.
Diversification Opportunities for Granite Construction and Austal
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Granite and Austal is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Austal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austal Limited 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 Austal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austal Limited has no effect on the direction of Granite Construction i.e., Granite Construction and Austal go up and down completely randomly.
Pair Corralation between Granite Construction and Austal
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.25 times more return on investment than Austal. However, Granite Construction Incorporated is 4.01 times less risky than Austal. It trades about 0.55 of its potential returns per unit of risk. Austal Limited is currently generating about 0.03 per unit of risk. If you would invest 8,218 in Granite Construction Incorporated on August 29, 2024 and sell it today you would earn a total of 1,658 from holding Granite Construction Incorporated or generate 20.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Austal Limited
Performance |
| Timeline |
| Granite Construction |
| Austal Limited |
Granite Construction and Austal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Austal
The main advantage of trading using opposite Granite Construction and Austal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Austal 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 Austal will offset losses from the drop in Austal's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Austal vs. 808 Renewable Energy | Austal vs. Sky Harbour Group | Austal vs. VirTra Inc | Austal vs. Firan Technology Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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