Correlation Between Granite Construction and Dirtt Environmen
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Dirtt Environmen 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 Dirtt Environmen 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 Dirtt Environmen, you can compare the effects of market volatilities on Granite Construction and Dirtt Environmen 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 Dirtt Environmen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Dirtt Environmen.
Diversification Opportunities for Granite Construction and Dirtt Environmen
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and Dirtt is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Dirtt Environmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirtt Environmen 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 Dirtt Environmen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dirtt Environmen has no effect on the direction of Granite Construction i.e., Granite Construction and Dirtt Environmen go up and down completely randomly.
Pair Corralation between Granite Construction and Dirtt Environmen
Considering the 90-day investment horizon Granite Construction is expected to generate 1.32 times less return on investment than Dirtt Environmen. But when comparing it to its historical volatility, Granite Construction Incorporated is 4.57 times less risky than Dirtt Environmen. It trades about 0.13 of its potential returns per unit of risk. Dirtt Environmen is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Dirtt Environmen on August 27, 2024 and sell it today you would lose (1.00) from holding Dirtt Environmen or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 31.85% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Dirtt Environmen
Performance |
| Timeline |
| Granite Construction |
| Dirtt Environmen |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Granite Construction and Dirtt Environmen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Dirtt Environmen
The main advantage of trading using opposite Granite Construction and Dirtt Environmen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Dirtt Environmen 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 Dirtt Environmen will offset losses from the drop in Dirtt Environmen's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Dirtt Environmen vs. Orion Group Holdings | Dirtt Environmen vs. ENGlobal | Dirtt Environmen vs. Cardno Limited | Dirtt Environmen vs. JNS Holdings Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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