Correlation Between Everus Construction and Quanta Services

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

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

Diversification Opportunities for Everus Construction and Quanta Services

-0.03

Correlation Coefficient

Everus Construction  Quanta Services

Good diversification

The 3 months correlation between Everus and Quanta is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services and Everus 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 Everus Construction Group are associated (or correlated) with Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Everus Construction i.e., Everus Construction and Quanta Services go up and down completely randomly.

Pair Corralation between Everus Construction and Quanta Services

Considering the 90-day investment horizon Everus Construction Group is expected to generate 2.35 times more return on investment than Quanta Services. However, Everus Construction is 2.35 times more volatile than Quanta Services. It trades about 0.24 of its potential returns per unit of risk. Quanta Services is currently generating about 0.09 per unit of risk. If you would invest  4,900  in Everus Construction Group on September 30, 2024 and sell it today you would earn a total of  2,085  from holding Everus Construction Group or generate 42.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.75%
Values	Daily Returns

Everus Construction Group  vs.  Quanta Services

Everus Construction

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Quanta Services

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Quanta Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Everus Construction and Quanta Services

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

The idea behind Everus Construction Group and Quanta Services 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.