Correlation Between Everus Construction and GENERAL

Can any of the company-specific risk be diversified away by investing in both Everus Construction and GENERAL 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 GENERAL 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 GENERAL ELEC CAP, you can compare the effects of market volatilities on Everus Construction and GENERAL 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 GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everus Construction and GENERAL.

Diversification Opportunities for Everus Construction and GENERAL

-0.36

Correlation Coefficient

Everus Construction  GENERAL

Very good diversification

The 3 months correlation between Everus and GENERAL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Everus Construction i.e., Everus Construction and GENERAL go up and down completely randomly.

Pair Corralation between Everus Construction and GENERAL

Considering the 90-day investment horizon Everus Construction Group is expected to generate 1.69 times more return on investment than GENERAL. However, Everus Construction is 1.69 times more volatile than GENERAL ELEC CAP. It trades about 0.27 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about -0.06 per unit of risk. If you would invest  4,900  in Everus Construction Group on September 16, 2024 and sell it today you would earn a total of  1,917  from holding Everus Construction Group or generate 39.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Everus Construction Group  vs.  GENERAL ELEC CAP

Everus Construction

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for GENERAL ELEC CAP investors.

Pair Trading with Everus Construction and GENERAL

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

The idea behind Everus Construction Group and GENERAL ELEC CAP 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.