Correlation Between MACOM Technology and Granite Construction
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Granite Construction 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 MACOM Technology and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Granite Construction, you can compare the effects of market volatilities on MACOM Technology and Granite Construction 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 MACOM Technology with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Granite Construction.
Diversification Opportunities for MACOM Technology and Granite Construction
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MACOM and Granite is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of MACOM Technology i.e., MACOM Technology and Granite Construction go up and down completely randomly.
Pair Corralation between MACOM Technology and Granite Construction
Assuming the 90 days horizon MACOM Technology Solutions is expected to under-perform the Granite Construction. In addition to that, MACOM Technology is 1.76 times more volatile than Granite Construction. It trades about -0.15 of its total potential returns per unit of risk. Granite Construction is currently generating about -0.21 per unit of volatility. If you would invest 9,436 in Granite Construction on December 4, 2024 and sell it today you would lose (1,736) from holding Granite Construction or give up 18.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
MACOM Technology Solutions vs. Granite Construction
Performance |
Timeline |
MACOM Technology Sol |
Granite Construction |
MACOM Technology and Granite Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MACOM Technology and Granite Construction
The main advantage of trading using opposite MACOM Technology and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.MACOM Technology vs. Japan Tobacco | MACOM Technology vs. IMAGIN MEDICAL INC | MACOM Technology vs. MEDICAL FACILITIES NEW | MACOM Technology vs. GERATHERM MEDICAL |
Granite Construction vs. SPORTING | Granite Construction vs. Fukuyama Transporting Co | Granite Construction vs. Transport International Holdings | Granite Construction vs. GungHo Online Entertainment |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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