Correlation Between Innovate Corp and MasTec

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

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

Diversification Opportunities for Innovate Corp and MasTec

0.14

Correlation Coefficient

Innovate Corp  MasTec

Average diversification

The 3 months correlation between Innovate and MasTec is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Innovate Corp and MasTec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasTec Inc and Innovate 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 Innovate 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 Innovate Corp i.e., Innovate Corp and MasTec go up and down completely randomly.

Pair Corralation between Innovate Corp and MasTec

Given the investment horizon of 90 days Innovate Corp is expected to generate 2.86 times more return on investment than MasTec. However, Innovate Corp is 2.86 times more volatile than MasTec Inc. It trades about 0.09 of its potential returns per unit of risk. MasTec Inc is currently generating about -0.07 per unit of risk. If you would invest  482.00  in Innovate Corp on September 22, 2024 and sell it today you would earn a total of  43.00  from holding Innovate Corp or generate 8.92% return on investment over 90 days.

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

Innovate Corp  vs.  MasTec Inc

Innovate Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovate Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Innovate Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

MasTec Inc

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Innovate Corp and MasTec

The main advantage of trading using opposite Innovate Corp and MasTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovate 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 Innovate 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.