Correlation Between Sterling Construction and Tutor Perini

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

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

Diversification Opportunities for Sterling Construction and Tutor Perini

0.17

Correlation Coefficient

Sterling Construction  Tutor Perini

Average diversification

The 3 months correlation between Sterling and Tutor is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Tutor Perini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tutor Perini and Sterling Construction 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 Sterling Construction are associated (or correlated) with Tutor Perini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tutor Perini has no effect on the direction of Sterling Construction i.e., Sterling Construction and Tutor Perini go up and down completely randomly.

Pair Corralation between Sterling Construction and Tutor Perini

Given the investment horizon of 90 days Sterling Construction is expected to under-perform the Tutor Perini. But the stock apears to be less risky and, when comparing its historical volatility, Sterling Construction is 1.11 times less risky than Tutor Perini. The stock trades about -0.11 of its potential returns per unit of risk. The Tutor Perini is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,393  in Tutor Perini on December 28, 2024 and sell it today you would lose (41.00) from holding Tutor Perini or give up 1.71% of portfolio value over 90 days.

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

Sterling Construction  vs.  Tutor Perini

Sterling Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sterling Construction 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tutor Perini

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tutor Perini are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Tutor Perini is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sterling Construction and Tutor Perini

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

The idea behind Sterling Construction and Tutor Perini 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.