Correlation Between Sterling Construction and Dycom Industries
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and Dycom Industries 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 Sterling Construction and Dycom Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Dycom Industries, you can compare the effects of market volatilities on Sterling Construction and Dycom Industries 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 Sterling Construction with a short position of Dycom Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Dycom Industries.
Diversification Opportunities for Sterling Construction and Dycom Industries
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sterling and Dycom is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Dycom Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycom Industries and Sterling Construction 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 Sterling Construction are associated (or correlated) with Dycom Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycom Industries has no effect on the direction of Sterling Construction i.e., Sterling Construction and Dycom Industries go up and down completely randomly.
Pair Corralation between Sterling Construction and Dycom Industries
Given the investment horizon of 90 days Sterling Construction is expected to generate 1.32 times more return on investment than Dycom Industries. However, Sterling Construction is 1.32 times more volatile than Dycom Industries. It trades about 0.13 of its potential returns per unit of risk. Dycom Industries is currently generating about 0.02 per unit of risk. If you would invest 11,746 in Sterling Construction on August 30, 2024 and sell it today you would earn a total of 7,795 from holding Sterling Construction or generate 66.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Dycom Industries
Performance |
| Timeline |
| Sterling Construction |
| Dycom Industries |
Sterling Construction and Dycom Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Dycom Industries
The main advantage of trading using opposite Sterling Construction and Dycom Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, Dycom Industries 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 Dycom Industries will offset losses from the drop in Dycom Industries' long position.| Sterling Construction vs. Dycom Industries | Sterling Construction vs. Innovate Corp | Sterling Construction vs. Energy Services | Sterling Construction vs. Wang Lee Group, |
| Dycom Industries vs. EMCOR Group | Dycom Industries vs. MYR Group | Dycom Industries vs. Topbuild Corp | Dycom Industries vs. Api Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |