Correlation Between Orion Group and Arcosa

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

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

Diversification Opportunities for Orion Group and Arcosa

0.92

Correlation Coefficient

Orion Group  Arcosa

Almost no diversification

The 3 months correlation between Orion and Arcosa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Orion Group Holdings and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa Inc and Orion Group 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 Orion Group Holdings are associated (or correlated) with Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of Orion Group i.e., Orion Group and Arcosa go up and down completely randomly.

Pair Corralation between Orion Group and Arcosa

Considering the 90-day investment horizon Orion Group Holdings is expected to under-perform the Arcosa. In addition to that, Orion Group is 2.33 times more volatile than Arcosa Inc. It trades about -0.08 of its total potential returns per unit of risk. Arcosa Inc is currently generating about -0.17 per unit of volatility. If you would invest  10,072  in Arcosa Inc on December 18, 2024 and sell it today you would lose (1,948) from holding Arcosa Inc or give up 19.34% of portfolio value over 90 days.

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

Orion Group Holdings  vs.  Arcosa Inc

Orion Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orion Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Arcosa Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcosa Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Orion Group and Arcosa

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

The idea behind Orion Group Holdings and Arcosa Inc 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.