Correlation Between IES Holdings and Arcosa
Can any of the company-specific risk be diversified away by investing in both IES Holdings and Arcosa 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 IES Holdings and Arcosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IES Holdings and Arcosa Inc, you can compare the effects of market volatilities on IES Holdings and Arcosa 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 IES Holdings with a short position of Arcosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of IES Holdings and Arcosa.
Diversification Opportunities for IES Holdings and Arcosa
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IES and Arcosa is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa Inc and IES Holdings 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 IES Holdings are associated (or correlated) with Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of IES Holdings i.e., IES Holdings and Arcosa go up and down completely randomly.
Pair Corralation between IES Holdings and Arcosa
Given the investment horizon of 90 days IES Holdings is expected to generate 2.19 times more return on investment than Arcosa. However, IES Holdings is 2.19 times more volatile than Arcosa Inc. It trades about 0.37 of its potential returns per unit of risk. Arcosa Inc is currently generating about 0.44 per unit of risk. If you would invest 21,131 in IES Holdings on August 27, 2024 and sell it today you would earn a total of 6,837 from holding IES Holdings or generate 32.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IES Holdings vs. Arcosa Inc
Performance |
| Timeline |
| IES Holdings |
| Arcosa Inc |
IES Holdings and Arcosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IES Holdings and Arcosa
The main advantage of trading using opposite IES Holdings and Arcosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings position performs unexpectedly, Arcosa 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 Arcosa will offset losses from the drop in Arcosa's long position.| IES Holdings vs. EMCOR Group | IES Holdings vs. Comfort Systems USA | IES Holdings vs. Primoris Services | IES Holdings vs. Granite Construction Incorporated |
| Arcosa vs. Construction Partners | Arcosa vs. Topbuild Corp | Arcosa vs. Comfort Systems USA | Arcosa vs. Ameresco |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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