Correlation Between Granite Construction and Sumitomo Corp
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Sumitomo Corp 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 Sumitomo Corp 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 Sumitomo Corp ADR, you can compare the effects of market volatilities on Granite Construction and Sumitomo Corp 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 Sumitomo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Sumitomo Corp.
Diversification Opportunities for Granite Construction and Sumitomo Corp
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and Sumitomo is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Sumitomo Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Corp 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 Sumitomo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Corp ADR has no effect on the direction of Granite Construction i.e., Granite Construction and Sumitomo Corp go up and down completely randomly.
Pair Corralation between Granite Construction and Sumitomo Corp
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 1.11 times more return on investment than Sumitomo Corp. However, Granite Construction is 1.11 times more volatile than Sumitomo Corp ADR. It trades about 0.55 of its potential returns per unit of risk. Sumitomo Corp ADR is currently generating about 0.04 per unit of risk. If you would invest 8,405 in Granite Construction Incorporated on September 1, 2024 and sell it today you would earn a total of 1,532 from holding Granite Construction Incorporated or generate 18.23% 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. Sumitomo Corp ADR
Performance |
| Timeline |
| Granite Construction |
| Sumitomo Corp ADR |
Granite Construction and Sumitomo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Sumitomo Corp
The main advantage of trading using opposite Granite Construction and Sumitomo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Sumitomo Corp 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 Sumitomo Corp will offset losses from the drop in Sumitomo Corp's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Sumitomo Corp vs. Itochu Corp ADR | Sumitomo Corp vs. Mitsubishi Corp | Sumitomo Corp vs. ITOCHU | Sumitomo Corp vs. Marubeni Corp ADR |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |