Correlation Between Granite Construction and Weebit Nano
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Weebit Nano 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 Weebit Nano 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 Weebit Nano Limited, you can compare the effects of market volatilities on Granite Construction and Weebit Nano 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 Weebit Nano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Weebit Nano.
Diversification Opportunities for Granite Construction and Weebit Nano
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Granite and Weebit is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Weebit Nano Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weebit Nano Limited 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 Weebit Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weebit Nano Limited has no effect on the direction of Granite Construction i.e., Granite Construction and Weebit Nano go up and down completely randomly.
Pair Corralation between Granite Construction and Weebit Nano
Considering the 90-day investment horizon Granite Construction is expected to generate 2.1 times less return on investment than Weebit Nano. But when comparing it to its historical volatility, Granite Construction Incorporated is 5.19 times less risky than Weebit Nano. It trades about 0.61 of its potential returns per unit of risk. Weebit Nano Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Weebit Nano Limited on August 26, 2024 and sell it today you would earn a total of 56.00 from holding Weebit Nano Limited or generate 43.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Weebit Nano Limited
Performance |
| Timeline |
| Granite Construction |
| Weebit Nano Limited |
Granite Construction and Weebit Nano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Weebit Nano
The main advantage of trading using opposite Granite Construction and Weebit Nano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Weebit Nano 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 Weebit Nano will offset losses from the drop in Weebit Nano's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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