Correlation Between Granite Construction and Dr Martens
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Dr Martens 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 Dr Martens 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 Dr Martens plc, you can compare the effects of market volatilities on Granite Construction and Dr Martens 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 Dr Martens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Dr Martens.
Diversification Opportunities for Granite Construction and Dr Martens
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and DOCMF is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Dr Martens plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Martens plc 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 Dr Martens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Martens plc has no effect on the direction of Granite Construction i.e., Granite Construction and Dr Martens go up and down completely randomly.
Pair Corralation between Granite Construction and Dr Martens
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.44 times more return on investment than Dr Martens. However, Granite Construction Incorporated is 2.3 times less risky than Dr Martens. It trades about 0.56 of its potential returns per unit of risk. Dr Martens plc is currently generating about -0.04 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Dr Martens plc
Performance |
| Timeline |
| Granite Construction |
| Dr Martens plc |
Granite Construction and Dr Martens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Dr Martens
The main advantage of trading using opposite Granite Construction and Dr Martens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Dr Martens 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 Dr Martens will offset losses from the drop in Dr Martens' long position.| Granite Construction vs. Innovate Corp | Granite Construction vs. Energy Services | Granite Construction vs. Topbuild Corp |
| Dr Martens vs. American Rebel Holdings | Dr Martens vs. American Rebel Holdings | Dr Martens vs. Crocs Inc | Dr Martens vs. On Holding |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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