Correlation Between MasTec and Dycom Industries

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

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

Diversification Opportunities for MasTec and Dycom Industries

0.29

Correlation Coefficient

MasTec  Dycom Industries

Modest diversification

The 3 months correlation between MasTec and Dycom is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding MasTec Inc and Dycom Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycom Industries and MasTec 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 MasTec Inc are associated (or correlated) with Dycom Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycom Industries has no effect on the direction of MasTec i.e., MasTec and Dycom Industries go up and down completely randomly.

Pair Corralation between MasTec and Dycom Industries

Considering the 90-day investment horizon MasTec Inc is expected to generate 0.85 times more return on investment than Dycom Industries. However, MasTec Inc is 1.18 times less risky than Dycom Industries. It trades about 0.11 of its potential returns per unit of risk. Dycom Industries is currently generating about 0.02 per unit of risk. If you would invest  10,796  in MasTec Inc on September 2, 2024 and sell it today you would earn a total of  3,610  from holding MasTec Inc or generate 33.44% return on investment over 90 days.

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

MasTec Inc  vs.  Dycom Industries

MasTec Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MasTec Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, MasTec showed solid returns over the last few months and may actually be approaching a breakup point.

Dycom Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dycom Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dycom Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MasTec and Dycom Industries

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

The idea behind MasTec Inc and Dycom Industries 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.