Correlation Between Everus Construction and Black Hills

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Can any of the company-specific risk be diversified away by investing in both Everus Construction and Black Hills 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 Everus Construction and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everus Construction Group and Black Hills, you can compare the effects of market volatilities on Everus Construction and Black Hills 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 Everus Construction with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everus Construction and Black Hills.

Diversification Opportunities for Everus Construction and Black Hills

EverusBlackDiversified AwayEverusBlackDiversified Away100%
0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Everus and Black is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and Everus 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 Everus Construction Group are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Everus Construction i.e., Everus Construction and Black Hills go up and down completely randomly.

Pair Corralation between Everus Construction and Black Hills

Considering the 90-day investment horizon Everus Construction Group is expected to generate 3.08 times more return on investment than Black Hills. However, Everus Construction is 3.08 times more volatile than Black Hills. It trades about 0.25 of its potential returns per unit of risk. Black Hills is currently generating about -0.04 per unit of risk. If you would invest  4,900  in Everus Construction Group on September 25, 2024 and sell it today you would earn a total of  1,980  from holding Everus Construction Group or generate 40.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy63.49%
ValuesDaily Returns

Everus Construction Group  vs.  Black Hills

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -25-20-15-10-505
JavaScript chart by amCharts 3.21.15ECG BKH
       Timeline  
Everus Construction 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15Oct 28Nov 04Nov 11Nov 18Nov 25Dec 02Dec 09Dec 16Nov 04Nov 11Nov 18Nov 25Dec 02Dec 09Dec 16Dec 2340455055606570
Black Hills 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Black Hills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec575859606162636465

Everus Construction and Black Hills Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.15-8.35-5.55-2.75-0.033.066.239.412.5615.73 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15ECG BKH
       Returns  

Pair Trading with Everus Construction and Black Hills

The main advantage of trading using opposite Everus Construction and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everus Construction position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.
The idea behind Everus Construction Group and Black Hills 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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