Correlation Between Balfour Beatty and Glacier Bancorp

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

By analyzing existing cross correlation between Balfour Beatty plc and Glacier Bancorp, you can compare the effects of market volatilities on Balfour Beatty and Glacier Bancorp 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 Balfour Beatty with a short position of Glacier Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balfour Beatty and Glacier Bancorp.

Diversification Opportunities for Balfour Beatty and Glacier Bancorp

-0.31

Correlation Coefficient

Balfour Beatty  Glacier Bancorp

Very good diversification

The 3 months correlation between Balfour and Glacier is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Balfour Beatty plc and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp and Balfour Beatty 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 Balfour Beatty plc are associated (or correlated) with Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of Balfour Beatty i.e., Balfour Beatty and Glacier Bancorp go up and down completely randomly.

Pair Corralation between Balfour Beatty and Glacier Bancorp

Assuming the 90 days horizon Balfour Beatty plc is expected to under-perform the Glacier Bancorp. In addition to that, Balfour Beatty is 1.18 times more volatile than Glacier Bancorp. It trades about 0.0 of its total potential returns per unit of risk. Glacier Bancorp is currently generating about 0.14 per unit of volatility. If you would invest  4,513  in Glacier Bancorp on September 18, 2024 and sell it today you would earn a total of  960.00  from holding Glacier Bancorp or generate 21.27% return on investment over 90 days.

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

Balfour Beatty plc  vs.  Glacier Bancorp

Balfour Beatty plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balfour Beatty plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Balfour Beatty is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Glacier Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glacier Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Glacier Bancorp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Balfour Beatty and Glacier Bancorp

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

The idea behind Balfour Beatty plc and Glacier Bancorp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.