Correlation Between Great Lakes and Cardno

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

By analyzing existing cross correlation between Great Lakes Dredge and Cardno Limited, you can compare the effects of market volatilities on Great Lakes and Cardno 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 Great Lakes with a short position of Cardno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Lakes and Cardno.

Diversification Opportunities for Great Lakes and Cardno

-0.84

Correlation Coefficient

Great Lakes  Cardno

Pay attention - limited upside

The 3 months correlation between Great and Cardno is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Cardno Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardno Limited and Great Lakes 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 Great Lakes Dredge are associated (or correlated) with Cardno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardno Limited has no effect on the direction of Great Lakes i.e., Great Lakes and Cardno go up and down completely randomly.

Pair Corralation between Great Lakes and Cardno

Given the investment horizon of 90 days Great Lakes Dredge is expected to generate 0.47 times more return on investment than Cardno. However, Great Lakes Dredge is 2.12 times less risky than Cardno. It trades about 0.23 of its potential returns per unit of risk. Cardno Limited is currently generating about -0.3 per unit of risk. If you would invest  946.00  in Great Lakes Dredge on August 31, 2024 and sell it today you would earn a total of  306.00  from holding Great Lakes Dredge or generate 32.35% return on investment over 90 days.

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

Great Lakes Dredge  vs.  Cardno Limited

Great Lakes Dredge

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great Lakes Dredge are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Great Lakes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cardno Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardno Limited 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 fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Great Lakes and Cardno

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

The idea behind Great Lakes Dredge and Cardno Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.