Correlation Between MasTec and Argan
Can any of the company-specific risk be diversified away by investing in both MasTec and Argan 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 MasTec and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MasTec Inc and Argan Inc, you can compare the effects of market volatilities on MasTec and Argan 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 MasTec with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of MasTec and Argan.
Diversification Opportunities for MasTec and Argan
Very poor diversification
The 3 months correlation between MasTec and Argan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding MasTec Inc and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and MasTec 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 MasTec Inc are associated (or correlated) with Argan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan Inc has no effect on the direction of MasTec i.e., MasTec and Argan go up and down completely randomly.
Pair Corralation between MasTec and Argan
Considering the 90-day investment horizon MasTec Inc is expected to generate 0.54 times more return on investment than Argan. However, MasTec Inc is 1.85 times less risky than Argan. It trades about 0.4 of its potential returns per unit of risk. Argan Inc is currently generating about 0.17 per unit of risk. If you would invest 12,000 in MasTec Inc on August 31, 2024 and sell it today you would earn a total of 2,455 from holding MasTec Inc or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MasTec Inc vs. Argan Inc
Performance |
| Timeline |
| MasTec Inc |
| Argan Inc |
MasTec and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MasTec and Argan
The main advantage of trading using opposite MasTec and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MasTec position performs unexpectedly, Argan 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 Argan will offset losses from the drop in Argan's long position.| MasTec vs. EMCOR Group | MasTec vs. Comfort Systems USA | MasTec vs. Primoris Services | MasTec vs. Granite Construction Incorporated |
| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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