Correlation Between Sterling Construction and Tutor Perini
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and Tutor Perini 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 Tutor Perini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Tutor Perini, you can compare the effects of market volatilities on Sterling Construction and Tutor Perini 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 Tutor Perini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Tutor Perini.
Diversification Opportunities for Sterling Construction and Tutor Perini
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sterling and Tutor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Tutor Perini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tutor Perini 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 Tutor Perini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tutor Perini has no effect on the direction of Sterling Construction i.e., Sterling Construction and Tutor Perini go up and down completely randomly.
Pair Corralation between Sterling Construction and Tutor Perini
Given the investment horizon of 90 days Sterling Construction is expected to generate 0.86 times more return on investment than Tutor Perini. However, Sterling Construction is 1.16 times less risky than Tutor Perini. It trades about 0.27 of its potential returns per unit of risk. Tutor Perini is currently generating about 0.05 per unit of risk. If you would invest 15,613 in Sterling Construction on August 30, 2024 and sell it today you would earn a total of 3,928 from holding Sterling Construction or generate 25.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Tutor Perini
Performance |
| Timeline |
| Sterling Construction |
| Tutor Perini |
Sterling Construction and Tutor Perini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Tutor Perini
The main advantage of trading using opposite Sterling Construction and Tutor Perini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, Tutor Perini 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 Tutor Perini will offset losses from the drop in Tutor Perini's long position.| Sterling Construction vs. Dycom Industries | Sterling Construction vs. Innovate Corp | Sterling Construction vs. Energy Services | Sterling Construction vs. Wang Lee Group, |
| Tutor Perini vs. Dycom Industries | Tutor Perini vs. Innovate Corp | Tutor Perini vs. Energy Services | Tutor Perini vs. Wang Lee Group, |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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