Correlation Between Sterling Construction and AECOM
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and AECOM 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 AECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and AECOM, you can compare the effects of market volatilities on Sterling Construction and AECOM 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 AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and AECOM.
Diversification Opportunities for Sterling Construction and AECOM
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sterling and AECOM is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM 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 AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of Sterling Construction i.e., Sterling Construction and AECOM go up and down completely randomly.
Pair Corralation between Sterling Construction and AECOM
Assuming the 90 days horizon Sterling Construction is expected to generate 1.04 times more return on investment than AECOM. However, Sterling Construction is 1.04 times more volatile than AECOM. It trades about 0.04 of its potential returns per unit of risk. AECOM is currently generating about 0.04 per unit of risk. If you would invest 17,730 in Sterling Construction on September 14, 2024 and sell it today you would earn a total of 340.00 from holding Sterling Construction or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sterling Construction vs. AECOM
Performance |
| Timeline |
| Sterling Construction |
| AECOM |
Sterling Construction and AECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and AECOM
The main advantage of trading using opposite Sterling Construction and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, AECOM 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 AECOM will offset losses from the drop in AECOM's long position.| Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. SIVERS SEMICONDUCTORS AB | Sterling Construction vs. Norsk Hydro ASA | Sterling Construction vs. Reliance Steel Aluminum |
| AECOM vs. Geely Automobile Holdings | AECOM vs. Arrow Electronics | AECOM vs. STORE ELECTRONIC | AECOM vs. Meiko Electronics Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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