Correlation Between Dycom Industries and Quanta Services

Can any of the company-specific risk be diversified away by investing in both Dycom Industries and Quanta 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 Quanta 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 Quanta Services, you can compare the effects of market volatilities on Dycom Industries and Quanta 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 Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycom Industries and Quanta Services.

Diversification Opportunities for Dycom Industries and Quanta Services

0.81

Correlation Coefficient

Dycom Industries  Quanta Services

Very poor diversification

The 3 months correlation between Dycom and Quanta is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta 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 Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Dycom Industries i.e., Dycom Industries and Quanta Services go up and down completely randomly.

Pair Corralation between Dycom Industries and Quanta Services

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 0.82 times more return on investment than Quanta Services. However, Dycom Industries is 1.22 times less risky than Quanta Services. It trades about -0.06 of its potential returns per unit of risk. Quanta Services is currently generating about -0.09 per unit of risk. If you would invest  17,517  in Dycom Industries on December 27, 2024 and sell it today you would lose (2,103) from holding Dycom Industries or give up 12.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Dycom Industries  vs.  Quanta 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.

Quanta Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quanta Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Dycom Industries and Quanta Services

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

The idea behind Dycom Industries and Quanta 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.