Correlation Between Tetra Tech and Great Lakes
Can any of the company-specific risk be diversified away by investing in both Tetra Tech and Great Lakes 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 Great Lakes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tetra Tech and Great Lakes Dredge, you can compare the effects of market volatilities on Tetra Tech and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetra Tech and Great Lakes.
Diversification Opportunities for Tetra Tech and Great Lakes
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tetra and Great is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tetra Tech and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of Tetra Tech i.e., Tetra Tech and Great Lakes go up and down completely randomly.
Pair Corralation between Tetra Tech and Great Lakes
Given the investment horizon of 90 days Tetra Tech is expected to under-perform the Great Lakes. In addition to that, Tetra Tech is 1.68 times more volatile than Great Lakes Dredge. It trades about -0.23 of its total potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.2 per unit of volatility. If you would invest 1,147 in Great Lakes Dredge on August 31, 2024 and sell it today you would earn a total of 105.00 from holding Great Lakes Dredge or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tetra Tech vs. Great Lakes Dredge
Performance |
| Timeline |
| Tetra Tech |
| Great Lakes Dredge |
Tetra Tech and Great Lakes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tetra Tech and Great Lakes
The main advantage of trading using opposite Tetra Tech and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetra Tech position performs unexpectedly, Great Lakes 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 Great Lakes will offset losses from the drop in Great Lakes' long position.| Tetra Tech vs. Jacobs Solutions | Tetra Tech vs. KBR Inc | Tetra Tech vs. Fluor | Tetra Tech vs. Topbuild Corp |
| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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