Correlation Between Granite Construction and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Nordic Semiconductor 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 Nordic Semiconductor 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 Nordic Semiconductor ASA, you can compare the effects of market volatilities on Granite Construction and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Nordic Semiconductor.
Diversification Opportunities for Granite Construction and Nordic Semiconductor
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and Nordic is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Granite Construction i.e., Granite Construction and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Granite Construction and Nordic Semiconductor
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.41 times more return on investment than Nordic Semiconductor. However, Granite Construction Incorporated is 2.46 times less risky than Nordic Semiconductor. It trades about 0.37 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.0 per unit of risk. If you would invest 7,928 in Granite Construction Incorporated on August 30, 2024 and sell it today you would earn a total of 1,941 from holding Granite Construction Incorporated or generate 24.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 97.73% |
Values | Daily Returns |
Granite Construction Incorpora vs. Nordic Semiconductor ASA
Performance |
Timeline |
Granite Construction |
Nordic Semiconductor ASA |
Granite Construction and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Granite Construction and Nordic Semiconductor
The main advantage of trading using opposite Granite Construction and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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