Correlation Between Everus Construction and Construction Partners

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

Diversification Opportunities for Everus Construction and Construction Partners

0.16

Correlation Coefficient

Everus Construction  Construction Partners

Average diversification

The 3 months correlation between Everus and Construction is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and Construction Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction Partners 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 Construction Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction Partners has no effect on the direction of Everus Construction i.e., Everus Construction and Construction Partners go up and down completely randomly.

Pair Corralation between Everus Construction and Construction Partners

Considering the 90-day investment horizon Everus Construction Group is expected to generate 1.38 times more return on investment than Construction Partners. However, Everus Construction is 1.38 times more volatile than Construction Partners. It trades about 0.02 of its potential returns per unit of risk. Construction Partners is currently generating about -0.27 per unit of risk. If you would invest  6,547  in Everus Construction Group on October 4, 2024 and sell it today you would earn a total of  28.00  from holding Everus Construction Group or generate 0.43% return on investment over 90 days.

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

Everus Construction Group  vs.  Construction Partners

Everus Construction

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Construction Partners

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Construction Partners are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Construction Partners exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everus Construction and Construction Partners

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

The idea behind Everus Construction Group and Construction Partners 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.