Correlation Between Primoris Services and MasTec

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

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

Diversification Opportunities for Primoris Services and MasTec

0.64

Correlation Coefficient

Primoris Services  MasTec

Poor diversification

The 3 months correlation between Primoris and MasTec is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Primoris Services and MasTec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasTec Inc and Primoris Services 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 Primoris Services are associated (or correlated) with MasTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MasTec Inc has no effect on the direction of Primoris Services i.e., Primoris Services and MasTec go up and down completely randomly.

Pair Corralation between Primoris Services and MasTec

Given the investment horizon of 90 days Primoris Services is expected to under-perform the MasTec. In addition to that, Primoris Services is 1.12 times more volatile than MasTec Inc. It trades about -0.06 of its total potential returns per unit of risk. MasTec Inc is currently generating about -0.03 per unit of volatility. If you would invest  14,406  in MasTec Inc on November 29, 2024 and sell it today you would lose (1,153) from holding MasTec Inc or give up 8.0% of portfolio value over 90 days.

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

Primoris Services  vs.  MasTec Inc

Primoris Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Primoris Services 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 forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

MasTec Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MasTec Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, MasTec is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Primoris Services and MasTec

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

The idea behind Primoris Services and MasTec 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.