Correlation Between Granite Construction and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Sandvik AB 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 Sandvik AB 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 Sandvik AB ADR, you can compare the effects of market volatilities on Granite Construction and Sandvik AB 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 Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Sandvik AB.
Diversification Opportunities for Granite Construction and Sandvik AB
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Granite and Sandvik is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Sandvik AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB ADR 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 Sandvik AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandvik AB ADR has no effect on the direction of Granite Construction i.e., Granite Construction and Sandvik AB go up and down completely randomly.
Pair Corralation between Granite Construction and Sandvik AB
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.83 times more return on investment than Sandvik AB. However, Granite Construction Incorporated is 1.2 times less risky than Sandvik AB. It trades about 0.53 of its potential returns per unit of risk. Sandvik AB ADR is currently generating about -0.17 per unit of risk. If you would invest 8,283 in Granite Construction Incorporated on August 25, 2024 and sell it today you would earn a total of 1,646 from holding Granite Construction Incorporated or generate 19.87% 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. Sandvik AB ADR
Performance |
| Timeline |
| Granite Construction |
| Sandvik AB ADR |
Granite Construction and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Sandvik AB
The main advantage of trading using opposite Granite Construction and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Sandvik AB 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 Sandvik AB will offset losses from the drop in Sandvik AB's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Sandvik AB vs. Rockwell Automation | Sandvik AB vs. Schneider Electric SA | Sandvik AB vs. Fanuc | Sandvik AB vs. Vestas Wind Systems |
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.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |