Correlation Between Dycom Industries and Founder Group

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

By analyzing existing cross correlation between Dycom Industries and Founder Group Limited, you can compare the effects of market volatilities on Dycom Industries and Founder Group 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 Dycom Industries with a short position of Founder Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycom Industries and Founder Group.

Diversification Opportunities for Dycom Industries and Founder Group

-0.25

Correlation Coefficient

Dycom Industries  Founder Group

Very good diversification

The 3 months correlation between Dycom and Founder is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Founder Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Founder Group Limited and Dycom Industries 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 Dycom Industries are associated (or correlated) with Founder Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Founder Group Limited has no effect on the direction of Dycom Industries i.e., Dycom Industries and Founder Group go up and down completely randomly.

Pair Corralation between Dycom Industries and Founder Group

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 0.18 times more return on investment than Founder Group. However, Dycom Industries is 5.41 times less risky than Founder Group. It trades about -0.04 of its potential returns per unit of risk. Founder Group Limited is currently generating about -0.01 per unit of risk. If you would invest  19,212  in Dycom Industries on October 1, 2024 and sell it today you would lose (1,695) from holding Dycom Industries or give up 8.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.6%
Values	Daily Returns

Dycom Industries  vs.  Founder Group Limited

Dycom Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dycom Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Founder Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Founder Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Dycom Industries and Founder Group

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

The idea behind Dycom Industries and Founder Group Limited 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.

Check out your portfolio center.

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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .