Correlation Between Quanta Services and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Quanta Services 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 Quanta Services and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Services and Granite Construction Incorporated, you can compare the effects of market volatilities on Quanta Services 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 Quanta Services with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Services and Granite Construction.
Diversification Opportunities for Quanta Services and Granite Construction
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quanta and Granite is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Services and Granite Construction Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 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 Quanta Services i.e., Quanta Services and Granite Construction go up and down completely randomly.
Pair Corralation between Quanta Services and Granite Construction
Considering the 90-day investment horizon Quanta Services is expected to generate 2.43 times more return on investment than Granite Construction. However, Quanta Services is 2.43 times more volatile than Granite Construction Incorporated. It trades about 0.02 of its potential returns per unit of risk. Granite Construction Incorporated is currently generating about 0.02 per unit of risk. If you would invest 31,220 in Quanta Services on November 9, 2024 and sell it today you would lose (112.00) from holding Quanta Services or give up 0.36% 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. Granite Construction Incorpora
Performance |
| Timeline |
| Quanta Services |
| Granite Construction |
Quanta Services and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanta Services and Granite Construction
The main advantage of trading using opposite Quanta Services and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Services 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.| Quanta Services vs. MYR Group | Quanta Services vs. Dycom Industries | Quanta Services vs. EMCOR Group | Quanta Services vs. Comfort Systems USA |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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