Correlation Between Quanta Services and Energy Services
Can any of the company-specific risk be diversified away by investing in both Quanta Services and Energy Services 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 Quanta Services and Energy Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Services and Energy Services, you can compare the effects of market volatilities on Quanta Services and Energy Services 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 Quanta Services with a short position of Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Services and Energy Services.
Diversification Opportunities for Quanta Services and Energy Services
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quanta and Energy is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Services and Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services and Quanta Services 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 Quanta Services are associated (or correlated) with Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Quanta Services i.e., Quanta Services and Energy Services go up and down completely randomly.
Pair Corralation between Quanta Services and Energy Services
Considering the 90-day investment horizon Quanta Services is expected to generate 0.72 times more return on investment than Energy Services. However, Quanta Services is 1.39 times less risky than Energy Services. It trades about -0.28 of its potential returns per unit of risk. Energy Services is currently generating about -0.23 per unit of risk. If you would invest 35,803 in Quanta Services on November 25, 2024 and sell it today you would lose (8,867) from holding Quanta Services or give up 24.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Quanta Services vs. Energy Services
Performance |
Timeline |
Quanta Services |
Energy Services |
Quanta Services and Energy Services Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Quanta Services and Energy Services
The main advantage of trading using opposite Quanta Services and Energy Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Services position performs unexpectedly, Energy Services 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 Energy Services will offset losses from the drop in Energy Services' long position.Quanta Services vs. MYR Group | ||
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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