Correlation Between IES Holdings and Granite Construction
Can any of the company-specific risk be diversified away by investing in both IES Holdings and Granite Construction 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 Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IES Holdings and Granite Construction Incorporated, you can compare the effects of market volatilities on IES Holdings and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of IES Holdings and Granite Construction.
Diversification Opportunities for IES Holdings and Granite Construction
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IES and Granite is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Granite Construction Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of IES Holdings i.e., IES Holdings and Granite Construction go up and down completely randomly.
Pair Corralation between IES Holdings and Granite Construction
Given the investment horizon of 90 days IES Holdings is expected to generate 1.83 times more return on investment than Granite Construction. However, IES Holdings is 1.83 times more volatile than Granite Construction Incorporated. It trades about 0.16 of its potential returns per unit of risk. Granite Construction Incorporated is currently generating about 0.15 per unit of risk. If you would invest 5,240 in IES Holdings on August 31, 2024 and sell it today you would earn a total of 25,746 from holding IES Holdings or generate 491.34% 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. Granite Construction Incorpora
Performance |
| Timeline |
| IES Holdings |
| Granite Construction |
IES Holdings and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IES Holdings and Granite Construction
The main advantage of trading using opposite IES Holdings and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction'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 |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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