Correlation Between Topbuild Corp and MasTec

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

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

Diversification Opportunities for Topbuild Corp and MasTec

-0.15

Correlation Coefficient

Topbuild Corp  MasTec

Good diversification

The 3 months correlation between Topbuild and MasTec is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and MasTec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasTec Inc and Topbuild Corp 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 Topbuild Corp 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 Topbuild Corp i.e., Topbuild Corp and MasTec go up and down completely randomly.

Pair Corralation between Topbuild Corp and MasTec

Considering the 90-day investment horizon Topbuild Corp is expected to generate 1.45 times more return on investment than MasTec. However, Topbuild Corp is 1.45 times more volatile than MasTec Inc. It trades about 0.0 of its potential returns per unit of risk. MasTec Inc is currently generating about -0.19 per unit of risk. If you would invest  37,041  in Topbuild Corp on September 12, 2024 and sell it today you would lose (377.00) from holding Topbuild Corp or give up 1.02% of portfolio value over 90 days.

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

Topbuild Corp  vs.  MasTec Inc

Topbuild Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Topbuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Topbuild Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MasTec Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MasTec Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, MasTec showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Topbuild Corp and MasTec

The main advantage of trading using opposite Topbuild Corp and MasTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topbuild Corp 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 Topbuild Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.