Correlation Between Quanta Services and Skanska AB
Can any of the company-specific risk be diversified away by investing in both Quanta Services and Skanska AB 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 Skanska AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Services and Skanska AB, you can compare the effects of market volatilities on Quanta Services and Skanska AB 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 Skanska AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Services and Skanska AB.
Diversification Opportunities for Quanta Services and Skanska AB
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quanta and Skanska is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Services and Skanska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB 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 Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB has no effect on the direction of Quanta Services i.e., Quanta Services and Skanska AB go up and down completely randomly.
Pair Corralation between Quanta Services and Skanska AB
Considering the 90-day investment horizon Quanta Services is expected to generate 0.69 times more return on investment than Skanska AB. However, Quanta Services is 1.45 times less risky than Skanska AB. It trades about 0.1 of its potential returns per unit of risk. Skanska AB is currently generating about 0.03 per unit of risk. If you would invest 15,032 in Quanta Services on August 26, 2024 and sell it today you would earn a total of 19,160 from holding Quanta Services or generate 127.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.09% |
| Values | Daily Returns |
Quanta Services vs. Skanska AB
Performance |
| Timeline |
| Quanta Services |
| Skanska AB |
Quanta Services and Skanska AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanta Services and Skanska AB
The main advantage of trading using opposite Quanta Services and Skanska AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Services position performs unexpectedly, Skanska AB 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 Skanska AB will offset losses from the drop in Skanska AB's long position.| Quanta Services vs. Innovate Corp | Quanta Services vs. Energy Services | Quanta Services vs. Api Group Corp | Quanta Services vs. Topbuild Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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