Correlation Between NV5 Global and Quanta Services

Can any of the company-specific risk be diversified away by investing in both NV5 Global and Quanta Services 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 NV5 Global and Quanta Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NV5 Global and Quanta Services, you can compare the effects of market volatilities on NV5 Global and Quanta Services 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 NV5 Global with a short position of Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV5 Global and Quanta Services.

Diversification Opportunities for NV5 Global and Quanta Services

-0.43

Correlation Coefficient

NV5 Global  Quanta Services

Very good diversification

The 3 months correlation between NV5 and Quanta is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NV5 Global and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services and NV5 Global 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 NV5 Global are associated (or correlated) with Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of NV5 Global i.e., NV5 Global and Quanta Services go up and down completely randomly.

Pair Corralation between NV5 Global and Quanta Services

Given the investment horizon of 90 days NV5 Global is expected to under-perform the Quanta Services. In addition to that, NV5 Global is 1.06 times more volatile than Quanta Services. It trades about -0.13 of its total potential returns per unit of risk. Quanta Services is currently generating about 0.15 per unit of volatility. If you would invest  25,752  in Quanta Services on October 3, 2024 and sell it today you would earn a total of  5,853  from holding Quanta Services or generate 22.73% return on investment over 90 days.

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

NV5 Global  vs.  Quanta Services

NV5 Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV5 Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Quanta Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Quanta Services may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NV5 Global and Quanta Services

The main advantage of trading using opposite NV5 Global and Quanta Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV5 Global position performs unexpectedly, Quanta Services 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 Quanta Services will offset losses from the drop in Quanta Services' long position.

The idea behind NV5 Global and Quanta Services 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.