Correlation Between Dycom Industries and Great Lakes

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

By analyzing existing cross correlation between Dycom Industries and Great Lakes Dredge, you can compare the effects of market volatilities on Dycom Industries and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycom Industries and Great Lakes.

Diversification Opportunities for Dycom Industries and Great Lakes

0.05

Correlation Coefficient

Dycom Industries  Great Lakes

Significant diversification

The 3 months correlation between Dycom and Great is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of Dycom Industries i.e., Dycom Industries and Great Lakes go up and down completely randomly.

Pair Corralation between Dycom Industries and Great Lakes

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 1.07 times more return on investment than Great Lakes. However, Dycom Industries is 1.07 times more volatile than Great Lakes Dredge. It trades about 0.28 of its potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.04 per unit of risk. If you would invest  19,256  in Dycom Industries on May 10, 2025 and sell it today you would earn a total of  8,657  from holding Dycom Industries or generate 44.96% return on investment over 90 days.

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

Dycom Industries  vs.  Great Lakes Dredge

Dycom Industries

Risk-Adjusted Performance

Solid

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.

Great Lakes Dredge

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Great Lakes Dredge are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Great Lakes is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dycom Industries and Great Lakes

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

The idea behind Dycom Industries and Great Lakes Dredge 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.