Correlation Between Aecom Technology and Dycom Industries

Can any of the company-specific risk be diversified away by investing in both Aecom Technology and Dycom Industries 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 Aecom Technology and Dycom Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aecom Technology and Dycom Industries, you can compare the effects of market volatilities on Aecom Technology and Dycom Industries 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 Aecom Technology with a short position of Dycom Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecom Technology and Dycom Industries.

Diversification Opportunities for Aecom Technology and Dycom Industries

0.83

Correlation Coefficient

Aecom Technology  Dycom Industries

Very poor diversification

The 3 months correlation between Aecom and Dycom is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Aecom Technology and Dycom Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycom Industries and Aecom 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 Aecom Technology are associated (or correlated) with Dycom Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycom Industries has no effect on the direction of Aecom Technology i.e., Aecom Technology and Dycom Industries go up and down completely randomly.

Pair Corralation between Aecom Technology and Dycom Industries

Considering the 90-day investment horizon Aecom Technology is expected to under-perform the Dycom Industries. But the stock apears to be less risky and, when comparing its historical volatility, Aecom Technology is 1.92 times less risky than Dycom Industries. The stock trades about -0.14 of its potential returns per unit of risk. The Dycom Industries is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  17,517  in Dycom Industries on December 27, 2024 and sell it today you would lose (1,740) from holding Dycom Industries or give up 9.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Aecom Technology  vs.  Dycom Industries

Aecom Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aecom Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Dycom Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dycom Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aecom Technology and Dycom Industries

The main advantage of trading using opposite Aecom Technology and Dycom Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecom Technology position performs unexpectedly, Dycom Industries 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 Dycom Industries will offset losses from the drop in Dycom Industries' long position.

The idea behind Aecom Technology and Dycom Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.