Correlation Between Tetra Tech and Shimmick Common
Can any of the company-specific risk be diversified away by investing in both Tetra Tech and Shimmick Common 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 Shimmick Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tetra Tech and Shimmick Common, you can compare the effects of market volatilities on Tetra Tech and Shimmick Common 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 Shimmick Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetra Tech and Shimmick Common.
Diversification Opportunities for Tetra Tech and Shimmick Common
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tetra and Shimmick is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tetra Tech and Shimmick Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimmick Common 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 Shimmick Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimmick Common has no effect on the direction of Tetra Tech i.e., Tetra Tech and Shimmick Common go up and down completely randomly.
Pair Corralation between Tetra Tech and Shimmick Common
Given the investment horizon of 90 days Tetra Tech is expected to under-perform the Shimmick Common. But the stock apears to be less risky and, when comparing its historical volatility, Tetra Tech is 1.87 times less risky than Shimmick Common. The stock trades about -0.18 of its potential returns per unit of risk. The Shimmick Common is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 216.00 in Shimmick Common on September 12, 2024 and sell it today you would earn a total of 85.00 from holding Shimmick Common or generate 39.35% 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. Shimmick Common
Performance |
| Timeline |
| Tetra Tech |
| Shimmick Common |
Tetra Tech and Shimmick Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tetra Tech and Shimmick Common
The main advantage of trading using opposite Tetra Tech and Shimmick Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetra Tech position performs unexpectedly, Shimmick Common 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 Shimmick Common will offset losses from the drop in Shimmick Common's long position.| Tetra Tech vs. Jacobs Solutions | Tetra Tech vs. KBR Inc | Tetra Tech vs. Fluor | Tetra Tech vs. Topbuild Corp |
| Shimmick Common vs. KBR Inc | Shimmick Common vs. Tetra Tech | Shimmick Common vs. Fluor | Shimmick Common 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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