Correlation Between Granite Construction and Enel SpA
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Enel SpA 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 Enel SpA 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 Enel SpA, you can compare the effects of market volatilities on Granite Construction and Enel SpA 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 Enel SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Enel SpA.
Diversification Opportunities for Granite Construction and Enel SpA
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and Enel is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA 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 Enel SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel SpA has no effect on the direction of Granite Construction i.e., Granite Construction and Enel SpA go up and down completely randomly.
Pair Corralation between Granite Construction and Enel SpA
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.73 times more return on investment than Enel SpA. However, Granite Construction Incorporated is 1.37 times less risky than Enel SpA. It trades about 0.56 of its potential returns per unit of risk. Enel SpA is currently generating about -0.23 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. Enel SpA
Performance |
| Timeline |
| Granite Construction |
| Enel SpA |
Granite Construction and Enel SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Enel SpA
The main advantage of trading using opposite Granite Construction and Enel SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Enel SpA 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 Enel SpA will offset losses from the drop in Enel SpA's long position.| Granite Construction vs. Innovate Corp | Granite Construction vs. Energy Services | Granite Construction vs. Topbuild 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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