Correlation Between Granite Construction and Dr Ing
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Dr Ing 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 Ing 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 Ing hc, you can compare the effects of market volatilities on Granite Construction and Dr Ing 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 Ing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Dr Ing.
Diversification Opportunities for Granite Construction and Dr Ing
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Granite and DRPRF is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Dr Ing hc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Ing hc 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 Ing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Ing hc has no effect on the direction of Granite Construction i.e., Granite Construction and Dr Ing go up and down completely randomly.
Pair Corralation between Granite Construction and Dr Ing
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.51 times more return on investment than Dr Ing. However, Granite Construction Incorporated is 1.96 times less risky than Dr Ing. It trades about 0.54 of its potential returns per unit of risk. Dr Ing hc is currently generating about -0.27 per unit of risk. If you would invest 8,283 in Granite Construction Incorporated on August 25, 2024 and sell it today you would earn a total of 1,646 from holding Granite Construction Incorporated or generate 19.87% 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 Ing hc
Performance |
| Timeline |
| Granite Construction |
| Dr Ing hc |
Granite Construction and Dr Ing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Dr Ing
The main advantage of trading using opposite Granite Construction and Dr Ing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Dr Ing 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 Ing will offset losses from the drop in Dr Ing's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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