Correlation Between Granite Construction and WSP Global
Can any of the company-specific risk be diversified away by investing in both Granite Construction and WSP Global 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 WSP Global 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 WSP Global, you can compare the effects of market volatilities on Granite Construction and WSP Global 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 WSP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and WSP Global.
Diversification Opportunities for Granite Construction and WSP Global
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Granite and WSP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global 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 WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Granite Construction i.e., Granite Construction and WSP Global go up and down completely randomly.
Pair Corralation between Granite Construction and WSP Global
Considering the 90-day investment horizon Granite Construction Incorporated is expected to under-perform the WSP Global. But the stock apears to be less risky and, when comparing its historical volatility, Granite Construction Incorporated is 1.01 times less risky than WSP Global. The stock trades about -0.18 of its potential returns per unit of risk. The WSP Global is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17,118 in WSP Global on December 18, 2024 and sell it today you would earn a total of 422.00 from holding WSP Global or generate 2.47% 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. WSP Global
Performance |
Timeline |
Granite Construction |
WSP Global |
Granite Construction and WSP Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Granite Construction and WSP Global
The main advantage of trading using opposite Granite Construction and WSP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, WSP Global 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 WSP Global will offset losses from the drop in WSP Global's long position.Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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