Correlation Between Granite Construction and Brookmount Explorations
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Brookmount Explorations 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 Brookmount Explorations 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 Brookmount Explorations, you can compare the effects of market volatilities on Granite Construction and Brookmount Explorations 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 Brookmount Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Brookmount Explorations.
Diversification Opportunities for Granite Construction and Brookmount Explorations
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and Brookmount is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Brookmount Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookmount Explorations 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 Brookmount Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookmount Explorations has no effect on the direction of Granite Construction i.e., Granite Construction and Brookmount Explorations go up and down completely randomly.
Pair Corralation between Granite Construction and Brookmount Explorations
Considering the 90-day investment horizon Granite Construction is expected to generate 2.77 times less return on investment than Brookmount Explorations. But when comparing it to its historical volatility, Granite Construction Incorporated is 9.03 times less risky than Brookmount Explorations. It trades about 0.22 of its potential returns per unit of risk. Brookmount Explorations is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.80 in Brookmount Explorations on August 26, 2024 and sell it today you would earn a total of 1.60 from holding Brookmount Explorations or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Brookmount Explorations
Performance |
| Timeline |
| Granite Construction |
| Brookmount Explorations |
Granite Construction and Brookmount Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Brookmount Explorations
The main advantage of trading using opposite Granite Construction and Brookmount Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Brookmount Explorations 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 Brookmount Explorations will offset losses from the drop in Brookmount Explorations' long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Brookmount Explorations vs. Aurion Resources | Brookmount Explorations vs. Liberty Gold Corp | Brookmount Explorations vs. Orezone Gold Corp | Brookmount Explorations vs. Radisson Mining Resources |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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