Correlation Between Tetra Tech and Ameresco
Can any of the company-specific risk be diversified away by investing in both Tetra Tech and Ameresco 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 Tetra Tech and Ameresco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tetra Tech and Ameresco, you can compare the effects of market volatilities on Tetra Tech and Ameresco 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 Tetra Tech with a short position of Ameresco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetra Tech and Ameresco.
Diversification Opportunities for Tetra Tech and Ameresco
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tetra and Ameresco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tetra Tech and Ameresco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameresco and Tetra Tech 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 Tetra Tech are associated (or correlated) with Ameresco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameresco has no effect on the direction of Tetra Tech i.e., Tetra Tech and Ameresco go up and down completely randomly.
Pair Corralation between Tetra Tech and Ameresco
Given the investment horizon of 90 days Tetra Tech is expected to under-perform the Ameresco. But the stock apears to be less risky and, when comparing its historical volatility, Tetra Tech is 1.68 times less risky than Ameresco. The stock trades about -0.2 of its potential returns per unit of risk. The Ameresco is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,077 in Ameresco on September 1, 2024 and sell it today you would lose (260.00) from holding Ameresco or give up 8.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tetra Tech vs. Ameresco
Performance |
| Timeline |
| Tetra Tech |
| Ameresco |
Tetra Tech and Ameresco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tetra Tech and Ameresco
The main advantage of trading using opposite Tetra Tech and Ameresco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetra Tech position performs unexpectedly, Ameresco 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 Ameresco will offset losses from the drop in Ameresco's long position.| Tetra Tech vs. Jacobs Solutions | Tetra Tech vs. KBR Inc | Tetra Tech vs. Fluor | Tetra Tech vs. Topbuild 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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