Correlation Between Dycom Industries and Energy Services

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

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

Diversification Opportunities for Dycom Industries and Energy Services

0.5

Correlation Coefficient

Dycom Industries  Energy Services

Very weak diversification

The 3 months correlation between Dycom and Energy is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services and Dycom Industries 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 Dycom Industries are associated (or correlated) with Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Dycom Industries i.e., Dycom Industries and Energy Services go up and down completely randomly.

Pair Corralation between Dycom Industries and Energy Services

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 0.56 times more return on investment than Energy Services. However, Dycom Industries is 1.79 times less risky than Energy Services. It trades about -0.06 of its potential returns per unit of risk. Energy Services is currently generating about -0.05 per unit of risk. If you would invest  17,478  in Dycom Industries on December 28, 2024 and sell it today you would lose (2,064) from holding Dycom Industries or give up 11.81% of portfolio value over 90 days.

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

Dycom Industries  vs.  Energy Services

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.

Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dycom Industries and Energy Services

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

The idea behind Dycom Industries and Energy Services 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.