Correlation Between Great Lakes and Api Group

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

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

Diversification Opportunities for Great Lakes and Api Group

0.32

Correlation Coefficient

Great Lakes  Api Group

Weak diversification

The 3 months correlation between Great and Api is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Api Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api Group Corp and Great Lakes 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 Great Lakes Dredge are associated (or correlated) with Api Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api Group Corp has no effect on the direction of Great Lakes i.e., Great Lakes and Api Group go up and down completely randomly.

Pair Corralation between Great Lakes and Api Group

Given the investment horizon of 90 days Great Lakes Dredge is expected to under-perform the Api Group. In addition to that, Great Lakes is 1.36 times more volatile than Api Group Corp. It trades about -0.03 of its total potential returns per unit of risk. Api Group Corp is currently generating about 0.08 per unit of volatility. If you would invest  3,768  in Api Group Corp on February 3, 2025 and sell it today you would earn a total of  464.00  from holding Api Group Corp or generate 12.31% return on investment over 90 days.

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

Great Lakes Dredge  vs.  Api Group Corp

Great Lakes Dredge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Lakes Dredge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Api Group Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Api Group Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Api Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Lakes and Api Group

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

The idea behind Great Lakes Dredge and Api Group Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.