Correlation Between Granite Construction and Toyota
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Toyota 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 Toyota 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 Toyota Motor Corp, you can compare the effects of market volatilities on Granite Construction and Toyota 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 Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Toyota.
Diversification Opportunities for Granite Construction and Toyota
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and Toyota is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Granite Construction i.e., Granite Construction and Toyota go up and down completely randomly.
Pair Corralation between Granite Construction and Toyota
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.92 times more return on investment than Toyota. However, Granite Construction Incorporated is 1.08 times less risky than Toyota. It trades about 0.6 of its potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.1 per unit of risk. If you would invest 8,218 in Granite Construction Incorporated on August 27, 2024 and sell it today you would earn a total of 1,695 from holding Granite Construction Incorporated or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Toyota Motor Corp
Performance |
| Timeline |
| Granite Construction |
| Toyota Motor Corp |
Granite Construction and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Toyota
The main advantage of trading using opposite Granite Construction and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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