Correlation Between Granite Construction and SNC Lavalin

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

Diversification Opportunities for Granite Construction and SNC Lavalin

0.36

Correlation Coefficient

Granite Construction  SNC Lavalin

Weak diversification

The 3 months correlation between Granite and SNC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and SNC Lavalin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNC Lavalin Group 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 SNC Lavalin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNC Lavalin Group has no effect on the direction of Granite Construction i.e., Granite Construction and SNC Lavalin go up and down completely randomly.

Pair Corralation between Granite Construction and SNC Lavalin

Considering the 90-day investment horizon Granite Construction is expected to generate 1.49 times less return on investment than SNC Lavalin. But when comparing it to its historical volatility, Granite Construction Incorporated is 1.37 times less risky than SNC Lavalin. It trades about 0.1 of its potential returns per unit of risk. SNC Lavalin Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,199  in SNC Lavalin Group on October 26, 2024 and sell it today you would earn a total of  3,617  from holding SNC Lavalin Group or generate 164.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.23%
Values	Daily Returns

Granite Construction Incorpora  vs.  SNC Lavalin Group

Granite Construction

Risk-Adjusted Performance

9 of 100

Good

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.

SNC Lavalin Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SNC Lavalin Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SNC Lavalin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Granite Construction and SNC Lavalin

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

The idea behind Granite Construction Incorporated and SNC Lavalin Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.