Correlation Between Granite Construction and Bowman Consulting
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Bowman Consulting 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 Bowman Consulting 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 Bowman Consulting Group, you can compare the effects of market volatilities on Granite Construction and Bowman Consulting 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 Bowman Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Bowman Consulting.
Diversification Opportunities for Granite Construction and Bowman Consulting
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Granite and Bowman is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Bowman Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowman Consulting 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 Bowman Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowman Consulting has no effect on the direction of Granite Construction i.e., Granite Construction and Bowman Consulting go up and down completely randomly.
Pair Corralation between Granite Construction and Bowman Consulting
Considering the 90-day investment horizon Granite Construction is expected to generate 4.77 times less return on investment than Bowman Consulting. But when comparing it to its historical volatility, Granite Construction Incorporated is 1.25 times less risky than Bowman Consulting. It trades about 0.03 of its potential returns per unit of risk. Bowman Consulting Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,500 in Bowman Consulting Group on October 26, 2024 and sell it today you would earn a total of 95.00 from holding Bowman Consulting Group or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Bowman Consulting Group
Performance |
| Timeline |
| Granite Construction |
| Bowman Consulting |
Granite Construction and Bowman Consulting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Bowman Consulting
The main advantage of trading using opposite Granite Construction and Bowman Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Bowman Consulting 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 Bowman Consulting will offset losses from the drop in Bowman Consulting's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Bowman Consulting vs. EMCOR Group | Bowman Consulting vs. Comfort Systems USA | Bowman Consulting vs. Primoris Services | Bowman Consulting vs. Granite Construction Incorporated |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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