Correlation Between Granite Construction and RTL Group
Can any of the company-specific risk be diversified away by investing in both Granite Construction and RTL Group 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 RTL Group 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 RTL Group SA, you can compare the effects of market volatilities on Granite Construction and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and RTL Group.
Diversification Opportunities for Granite Construction and RTL Group
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and RTL is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Granite Construction i.e., Granite Construction and RTL Group go up and down completely randomly.
Pair Corralation between Granite Construction and RTL Group
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.71 times more return on investment than RTL Group. However, Granite Construction Incorporated is 1.4 times less risky than RTL Group. It trades about 0.57 of its potential returns per unit of risk. RTL Group SA is currently generating about -0.19 per unit of risk. If you would invest 8,206 in Granite Construction Incorporated on August 31, 2024 and sell it today you would earn a total of 1,663 from holding Granite Construction Incorporated or generate 20.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Granite Construction Incorpora vs. RTL Group SA
Performance |
Timeline |
Granite Construction |
RTL Group SA |
Granite Construction and RTL Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Granite Construction and RTL Group
The main advantage of trading using opposite Granite Construction and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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