Correlation Between Granite Construction and Innovate Corp
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Innovate Corp 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 Innovate Corp 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 Innovate Corp, you can compare the effects of market volatilities on Granite Construction and Innovate Corp 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 Innovate Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Innovate Corp.
Diversification Opportunities for Granite Construction and Innovate Corp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Granite and Innovate is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Innovate Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovate Corp 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 Innovate Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovate Corp has no effect on the direction of Granite Construction i.e., Granite Construction and Innovate Corp go up and down completely randomly.
Pair Corralation between Granite Construction and Innovate Corp
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.3 times more return on investment than Innovate Corp. However, Granite Construction Incorporated is 3.33 times less risky than Innovate Corp. It trades about 0.12 of its potential returns per unit of risk. Innovate Corp is currently generating about -0.02 per unit of risk. If you would invest 3,385 in Granite Construction Incorporated on September 26, 2024 and sell it today you would earn a total of 5,727 from holding Granite Construction Incorporated or generate 169.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Granite Construction Incorpora vs. Innovate Corp
Performance |
Timeline |
Granite Construction |
Innovate Corp |
Granite Construction and Innovate Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Granite Construction and Innovate Corp
The main advantage of trading using opposite Granite Construction and Innovate Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Innovate Corp 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 Innovate Corp will offset losses from the drop in Innovate Corp's long position.Granite Construction vs. Innovate Corp | Granite Construction vs. Energy Services | Granite Construction vs. Everus Construction Group |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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