Correlation Between ScanSource and Granite Construction
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Granite Construction, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Granite Construction.
Diversification Opportunities for ScanSource and Granite Construction
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ScanSource and Granite is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and Granite Construction go up and down completely randomly.
Pair Corralation between ScanSource and Granite Construction
Assuming the 90 days horizon ScanSource is expected to under-perform the Granite Construction. In addition to that, ScanSource is 1.75 times more volatile than Granite Construction. It trades about -0.15 of its total potential returns per unit of risk. Granite Construction is currently generating about -0.05 per unit of volatility. If you would invest 8,650 in Granite Construction on November 6, 2024 and sell it today you would lose (200.00) from holding Granite Construction or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Granite Construction
Performance |
| Timeline |
| ScanSource |
| Granite Construction |
ScanSource and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Granite Construction
The main advantage of trading using opposite ScanSource and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.| ScanSource vs. Austevoll Seafood ASA | ScanSource vs. Tyson Foods | ScanSource vs. Suntory Beverage Food | ScanSource vs. INDOFOOD AGRI RES |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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