Correlation Between Granite Construction and Quanta Services
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Quanta Services 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 Quanta Services 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 Quanta Services, you can compare the effects of market volatilities on Granite Construction and Quanta Services 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 Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Quanta Services.
Diversification Opportunities for Granite Construction and Quanta Services
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Granite and Quanta is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services 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 Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Granite Construction i.e., Granite Construction and Quanta Services go up and down completely randomly.
Pair Corralation between Granite Construction and Quanta Services
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.97 times more return on investment than Quanta Services. However, Granite Construction Incorporated is 1.03 times less risky than Quanta Services. It trades about 0.51 of its potential returns per unit of risk. Quanta Services is currently generating about 0.3 per unit of risk. If you would invest 8,262 in Granite Construction Incorporated on August 24, 2024 and sell it today you would earn a total of 1,559 from holding Granite Construction Incorporated or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Quanta Services
Performance |
| Timeline |
| Granite Construction |
| Quanta Services |
Granite Construction and Quanta Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Quanta Services
The main advantage of trading using opposite Granite Construction and Quanta Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Quanta Services 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 Quanta Services will offset losses from the drop in Quanta Services' long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Quanta Services vs. MYR Group | Quanta Services vs. Dycom Industries | Quanta Services vs. EMCOR Group | Quanta Services vs. Comfort Systems USA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
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| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |