Correlation Between Tutor Perini and Great Lakes

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

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

Diversification Opportunities for Tutor Perini and Great Lakes

0.91

Correlation Coefficient

Tutor Perini  Great Lakes

Almost no diversification

The 3 months correlation between Tutor and Great is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tutor Perini 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 Tutor Perini 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 Tutor Perini 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 Tutor Perini i.e., Tutor Perini and Great Lakes go up and down completely randomly.

Pair Corralation between Tutor Perini and Great Lakes

Considering the 90-day investment horizon Tutor Perini is expected to generate 1.16 times less return on investment than Great Lakes. In addition to that, Tutor Perini is 1.82 times more volatile than Great Lakes Dredge. It trades about 0.11 of its total potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.23 per unit of volatility. If you would invest  946.00  in Great Lakes Dredge on August 31, 2024 and sell it today you would earn a total of  306.00  from holding Great Lakes Dredge or generate 32.35% return on investment over 90 days.

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

Tutor Perini  vs.  Great Lakes Dredge

Tutor Perini

Risk-Adjusted Performance

8 of 100

OK

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

Great Lakes Dredge

Risk-Adjusted Performance

17 of 100

Good

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 Tutor Perini and Great Lakes

The main advantage of trading using opposite Tutor Perini and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tutor Perini 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 Tutor Perini 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.