Correlation Between Aecom Technology and Dycom Industries

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Can any of the company-specific risk be diversified away by investing in both Aecom Technology and Dycom Industries 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 Aecom Technology and Dycom Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecom Technology and Dycom Industries, you can compare the effects of market volatilities on Aecom Technology and Dycom Industries 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 Aecom Technology with a short position of Dycom Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecom Technology and Dycom Industries.

Diversification Opportunities for Aecom Technology and Dycom Industries

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aecom and Dycom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aecom Technology and Dycom Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycom Industries and Aecom Technology 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 Aecom Technology are associated (or correlated) with Dycom Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycom Industries has no effect on the direction of Aecom Technology i.e., Aecom Technology and Dycom Industries go up and down completely randomly.

Pair Corralation between Aecom Technology and Dycom Industries

Considering the 90-day investment horizon Aecom Technology is expected to generate 2.7 times less return on investment than Dycom Industries. But when comparing it to its historical volatility, Aecom Technology is 1.5 times less risky than Dycom Industries. It trades about 0.17 of its potential returns per unit of risk. Dycom Industries is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  11,491  in Dycom Industries on December 29, 2023 and sell it today you would earn a total of  2,874  from holding Dycom Industries or generate 25.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aecom Technology  vs.  Dycom Industries

 Performance 
       Timeline  
Aecom Technology 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Aecom Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Aecom Technology is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Dycom Industries 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dycom Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Dycom Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Aecom Technology and Dycom Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aecom Technology and Dycom Industries

The main advantage of trading using opposite Aecom Technology and Dycom Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecom Technology position performs unexpectedly, Dycom Industries 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 Dycom Industries will offset losses from the drop in Dycom Industries' long position.
The idea behind Aecom Technology and Dycom Industries 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 CEOs Directory module to screen CEOs from public companies around the world.

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