Correlation Between Dycom Industries and Willdan

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

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

Diversification Opportunities for Dycom Industries and Willdan

0.91

Correlation Coefficient

Dycom Industries  Willdan

Almost no diversification

The 3 months correlation between Dycom and Willdan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group 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 Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of Dycom Industries i.e., Dycom Industries and Willdan go up and down completely randomly.

Pair Corralation between Dycom Industries and Willdan

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 2.52 times less return on investment than Willdan. But when comparing it to its historical volatility, Dycom Industries is 1.74 times less risky than Willdan. It trades about 0.27 of its potential returns per unit of risk. Willdan Group is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  4,500  in Willdan Group on May 12, 2025 and sell it today you would earn a total of  6,865  from holding Willdan Group or generate 152.56% return on investment over 90 days.

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

Dycom Industries  vs.  Willdan Group

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.

Willdan Group

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Willdan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dycom Industries and Willdan

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

The idea behind Dycom Industries and Willdan Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.