Correlation Between Dycom Industries and American Battery

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

Diversification Opportunities for Dycom Industries and American Battery

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Dycom and American is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and American Battery Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Battery Tec 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 American Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Battery Tec has no effect on the direction of Dycom Industries i.e., Dycom Industries and American Battery go up and down completely randomly.

Pair Corralation between Dycom Industries and American Battery

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 1.54 times less return on investment than American Battery. But when comparing it to its historical volatility, Dycom Industries is 2.81 times less risky than American Battery. It trades about 0.27 of its potential returns per unit of risk. American Battery Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  134.00  in American Battery Technology on May 12, 2025 and sell it today you would earn a total of  81.00  from holding American Battery Technology or generate 60.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Dycom Industries  vs.  American Battery Technology

 Performance 
       Timeline  
Dycom Industries 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Dycom Industries are ranked lower than 21 (%) 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.
American Battery Tec 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in American Battery Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, American Battery unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dycom Industries and American Battery Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dycom Industries and American Battery

The main advantage of trading using opposite Dycom Industries and American Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dycom Industries position performs unexpectedly, American Battery 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 American Battery will offset losses from the drop in American Battery's long position.
The idea behind Dycom Industries and American Battery Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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