Correlation Between Bird Construction and North American

Can any of the company-specific risk be diversified away by investing in both Bird Construction and North American 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 Bird Construction and North American into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Bird Construction and North American

0.2

Correlation Coefficient

Bird Construction  North American

Modest diversification

The 3 months correlation between Bird and North is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bird Construction and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const and Bird 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 Bird Construction are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of Bird Construction i.e., Bird Construction and North American go up and down completely randomly.

Pair Corralation between Bird Construction and North American

Assuming the 90 days trading horizon Bird Construction is expected to under-perform the North American. In addition to that, Bird Construction is 1.44 times more volatile than North American Construction. It trades about -0.21 of its total potential returns per unit of risk. North American Construction is currently generating about -0.09 per unit of volatility. If you would invest  2,858  in North American Construction on November 29, 2024 and sell it today you would lose (263.00) from holding North American Construction or give up 9.2% of portfolio value over 90 days.

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

Bird Construction  vs.  North American Construction

Bird Construction

Risk-Adjusted Performance

Very Weak

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

North American Const

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bird Construction and North American

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

The idea behind Bird Construction and North American Construction 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.