Correlation Between COSTAR GROUP and Granite Construction
Can any of the company-specific risk be diversified away by investing in both COSTAR GROUP 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 COSTAR GROUP and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTAR GROUP INC and Granite Construction, you can compare the effects of market volatilities on COSTAR GROUP 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 COSTAR GROUP with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTAR GROUP and Granite Construction.
Diversification Opportunities for COSTAR GROUP and Granite Construction
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between COSTAR and Granite is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding COSTAR GROUP INC and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and COSTAR GROUP 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 COSTAR GROUP INC 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 COSTAR GROUP i.e., COSTAR GROUP and Granite Construction go up and down completely randomly.
Pair Corralation between COSTAR GROUP and Granite Construction
Assuming the 90 days horizon COSTAR GROUP is expected to generate 13.56 times less return on investment than Granite Construction. But when comparing it to its historical volatility, COSTAR GROUP INC is 1.06 times less risky than Granite Construction. It trades about 0.02 of its potential returns per unit of risk. Granite Construction is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 6,538 in Granite Construction on August 25, 2024 and sell it today you would earn a total of 2,862 from holding Granite Construction or generate 43.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTAR GROUP INC vs. Granite Construction
Performance |
| Timeline |
| COSTAR GROUP INC |
| Granite Construction |
COSTAR GROUP and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTAR GROUP and Granite Construction
The main advantage of trading using opposite COSTAR GROUP and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTAR GROUP 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.| COSTAR GROUP vs. Sumitomo Mitsui Construction | COSTAR GROUP vs. Granite Construction | COSTAR GROUP vs. Titan Machinery | COSTAR GROUP vs. Hyster Yale Materials Handling |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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