Correlation Between Construction Partners and Argan
Can any of the company-specific risk be diversified away by investing in both Construction Partners and Argan 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 Construction Partners and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction Partners and Argan Inc, you can compare the effects of market volatilities on Construction Partners and Argan 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 Construction Partners with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction Partners and Argan.
Diversification Opportunities for Construction Partners and Argan
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Construction and Argan is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Construction Partners and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and Construction Partners 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 Construction Partners are associated (or correlated) with Argan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan Inc has no effect on the direction of Construction Partners i.e., Construction Partners and Argan go up and down completely randomly.
Pair Corralation between Construction Partners and Argan
Given the investment horizon of 90 days Construction Partners is expected to generate 1.18 times less return on investment than Argan. But when comparing it to its historical volatility, Construction Partners is 1.08 times less risky than Argan. It trades about 0.1 of its potential returns per unit of risk. Argan Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,787 in Argan Inc on November 2, 2024 and sell it today you would earn a total of 9,893 from holding Argan Inc or generate 261.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Construction Partners vs. Argan Inc
Performance |
| Timeline |
| Construction Partners |
| Argan Inc |
Construction Partners and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction Partners and Argan
The main advantage of trading using opposite Construction Partners and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction Partners position performs unexpectedly, Argan 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 Argan will offset losses from the drop in Argan's long position.| Construction Partners vs. MYR Group | Construction Partners vs. Granite Construction Incorporated | Construction Partners vs. Tutor Perini | Construction Partners vs. Sterling Construction |
| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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