Correlation Between Construction Partners and ENGlobal
Can any of the company-specific risk be diversified away by investing in both Construction Partners and ENGlobal 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 ENGlobal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction Partners and ENGlobal, you can compare the effects of market volatilities on Construction Partners and ENGlobal 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 ENGlobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction Partners and ENGlobal.
Diversification Opportunities for Construction Partners and ENGlobal
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Construction and ENGlobal is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Construction Partners and ENGlobal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGlobal 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 ENGlobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGlobal has no effect on the direction of Construction Partners i.e., Construction Partners and ENGlobal go up and down completely randomly.
Pair Corralation between Construction Partners and ENGlobal
Given the investment horizon of 90 days Construction Partners is expected to generate 0.73 times more return on investment than ENGlobal. However, Construction Partners is 1.37 times less risky than ENGlobal. It trades about 0.36 of its potential returns per unit of risk. ENGlobal is currently generating about 0.04 per unit of risk. If you would invest 7,806 in Construction Partners on September 4, 2024 and sell it today you would earn a total of 2,208 from holding Construction Partners or generate 28.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Construction Partners vs. ENGlobal
Performance |
| Timeline |
| Construction Partners |
| ENGlobal |
Construction Partners and ENGlobal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction Partners and ENGlobal
The main advantage of trading using opposite Construction Partners and ENGlobal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction Partners position performs unexpectedly, ENGlobal 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 ENGlobal will offset losses from the drop in ENGlobal's long position.| Construction Partners vs. MYR Group | Construction Partners vs. Granite Construction Incorporated | Construction Partners vs. Tutor Perini | Construction Partners vs. Sterling Construction |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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