Correlation Between Parkway Life and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Parkway Life 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 Parkway Life and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parkway Life Real and Granite Construction Incorporated, you can compare the effects of market volatilities on Parkway Life 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 Parkway Life with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkway Life and Granite Construction.
Diversification Opportunities for Parkway Life and Granite Construction
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parkway and Granite is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Parkway Life Real and Granite Construction Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and Parkway Life 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 Parkway Life Real 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 Parkway Life i.e., Parkway Life and Granite Construction go up and down completely randomly.
Pair Corralation between Parkway Life and Granite Construction
Assuming the 90 days horizon Parkway Life Real is expected to under-perform the Granite Construction. In addition to that, Parkway Life is 2.09 times more volatile than Granite Construction Incorporated. It trades about -0.02 of its total potential returns per unit of risk. Granite Construction Incorporated is currently generating about 0.34 per unit of volatility. If you would invest 7,393 in Granite Construction Incorporated on August 28, 2024 and sell it today you would earn a total of 2,520 from holding Granite Construction Incorporated or generate 34.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Parkway Life Real vs. Granite Construction Incorpora
Performance |
| Timeline |
| Parkway Life Real |
| Granite Construction |
Parkway Life and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parkway Life and Granite Construction
The main advantage of trading using opposite Parkway Life and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkway Life 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.| Parkway Life vs. Granite Construction Incorporated | Parkway Life vs. MicroStrategy Incorporated | Parkway Life vs. Deckers Outdoor | Parkway Life vs. Itron Inc |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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