Correlation Between Granite Construction and Fluor

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

By analyzing existing cross correlation between Granite Construction Incorporated and Fluor, you can compare the effects of market volatilities on Granite Construction and Fluor 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 Granite Construction with a short position of Fluor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Fluor.

Diversification Opportunities for Granite Construction and Fluor

0.49

Correlation Coefficient

Granite Construction  Fluor

Very weak diversification

The 3 months correlation between Granite and Fluor is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor and Granite 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 Granite Construction Incorporated are associated (or correlated) with Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Granite Construction i.e., Granite Construction and Fluor go up and down completely randomly.

Pair Corralation between Granite Construction and Fluor

Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.77 times more return on investment than Fluor. However, Granite Construction Incorporated is 1.3 times less risky than Fluor. It trades about 0.11 of its potential returns per unit of risk. Fluor is currently generating about 0.04 per unit of risk. If you would invest  3,823  in Granite Construction Incorporated on October 7, 2024 and sell it today you would earn a total of  5,121  from holding Granite Construction Incorporated or generate 133.95% return on investment over 90 days.

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

Granite Construction Incorpora  vs.  Fluor

Granite Construction

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Construction Incorporated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Granite Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fluor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Fluor is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Granite Construction and Fluor

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

The idea behind Granite Construction Incorporated and Fluor 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.