Correlation Between Quanta Services and Energy Services

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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

QuantaEnergyDiversified AwayQuantaEnergyDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Quanta Services  vs.  Energy Services

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15PWR ESOA
       Timeline  
Quanta Services 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Quanta Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb280300320340360
Energy Services 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb101214161820

Quanta Services and Energy Services Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.98-3.73-2.48-1.230.01.142.33.464.62 0.0150.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15PWR ESOA
       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.
The idea behind Quanta Services and Energy Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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