Correlation Between Great Lakes and Social Detention

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

Diversification Opportunities for Great Lakes and Social Detention

-0.82

Correlation Coefficient

Great Lakes  Social Detention

Pay attention - limited upside

The 3 months correlation between Great and Social is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Social Detention in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Detention 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 Social Detention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Detention has no effect on the direction of Great Lakes i.e., Great Lakes and Social Detention go up and down completely randomly.

Pair Corralation between Great Lakes and Social Detention

Given the investment horizon of 90 days Great Lakes Dredge is expected to under-perform the Social Detention. But the stock apears to be less risky and, when comparing its historical volatility, Great Lakes Dredge is 1.23 times less risky than Social Detention. The stock trades about -0.08 of its potential returns per unit of risk. The Social Detention is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Social Detention on December 28, 2024 and sell it today you would earn a total of  0.02  from holding Social Detention or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Great Lakes Dredge  vs.  Social Detention

Great Lakes Dredge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Lakes Dredge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Social Detention

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Social Detention are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Social Detention may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Great Lakes and Social Detention

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

The idea behind Great Lakes Dredge and Social Detention 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.

Check out your portfolio center.

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.