Correlation Between Orion Group and Great Lakes

Can any of the company-specific risk be diversified away by investing in both Orion Group and Great Lakes 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 Great Lakes 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 Great Lakes Dredge, you can compare the effects of market volatilities on Orion Group and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Group and Great Lakes.

Diversification Opportunities for Orion Group and Great Lakes

0.33

Correlation Coefficient

Orion Group  Great Lakes

Weak diversification

The 3 months correlation between Orion and Great is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Orion Group Holdings and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of Orion Group i.e., Orion Group and Great Lakes go up and down completely randomly.

Pair Corralation between Orion Group and Great Lakes

Considering the 90-day investment horizon Orion Group Holdings is expected to generate 1.55 times more return on investment than Great Lakes. However, Orion Group is 1.55 times more volatile than Great Lakes Dredge. It trades about 0.09 of its potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.07 per unit of risk. If you would invest  270.00  in Orion Group Holdings on August 31, 2024 and sell it today you would earn a total of  602.00  from holding Orion Group Holdings or generate 222.96% return on investment over 90 days.

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

Orion Group Holdings  vs.  Great Lakes Dredge

Orion Group Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Orion Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Great Lakes Dredge

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great Lakes Dredge are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Great Lakes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orion Group and Great Lakes

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

The idea behind Orion Group Holdings and Great Lakes Dredge 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.