Correlation Between Everus Construction and Sterling Construction

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

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

Diversification Opportunities for Everus Construction and Sterling Construction

0.87

Correlation Coefficient

Everus Construction  Sterling Construction

Very poor diversification

The 3 months correlation between Everus and Sterling is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and Everus Construction 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 Everus Construction Group are associated (or correlated) with Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Everus Construction i.e., Everus Construction and Sterling Construction go up and down completely randomly.

Pair Corralation between Everus Construction and Sterling Construction

Considering the 90-day investment horizon Everus Construction Group is expected to under-perform the Sterling Construction. But the stock apears to be less risky and, when comparing its historical volatility, Everus Construction Group is 1.03 times less risky than Sterling Construction. The stock trades about -0.14 of its potential returns per unit of risk. The Sterling Construction is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  16,222  in Sterling Construction on January 11, 2025 and sell it today you would lose (2,981) from holding Sterling Construction or give up 18.38% of portfolio value over 90 days.

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

Everus Construction Group  vs.  Sterling Construction

Everus Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Everus Construction Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sterling Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sterling Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Everus Construction and Sterling Construction

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

The idea behind Everus Construction Group and Sterling Construction 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.