Correlation Between Quanta Services and Great Lakes
Can any of the company-specific risk be diversified away by investing in both Quanta Services and Great Lakes 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 Great Lakes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Services and Great Lakes Dredge, you can compare the effects of market volatilities on Quanta Services and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Services and Great Lakes.
Diversification Opportunities for Quanta Services and Great Lakes
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Quanta and Great is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Services and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of Quanta Services i.e., Quanta Services and Great Lakes go up and down completely randomly.
Pair Corralation between Quanta Services and Great Lakes
Considering the 90-day investment horizon Quanta Services is expected to generate 0.74 times more return on investment than Great Lakes. However, Quanta Services is 1.36 times less risky than Great Lakes. It trades about 0.28 of its potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.19 per unit of risk. If you would invest 31,336 in Quanta Services on August 27, 2024 and sell it today you would earn a total of 2,956 from holding Quanta Services or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanta Services vs. Great Lakes Dredge
Performance |
| Timeline |
| Quanta Services |
| Great Lakes Dredge |
Quanta Services and Great Lakes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanta Services and Great Lakes
The main advantage of trading using opposite Quanta Services and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Services position performs unexpectedly, Great Lakes 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 Great Lakes will offset losses from the drop in Great Lakes' long position.| Quanta Services vs. MYR Group | Quanta Services vs. Dycom Industries | Quanta Services vs. EMCOR Group | Quanta Services vs. Comfort Systems USA |
| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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